What to expect from the ECB meeting today and the speech from Mario Draghi

Today the markets are awaiting the meeting of ECB at 14:45pm.  and also the speech from Mario Draghi at 15:30pm, where he will talk about the monetary policy of the Central Bank and QE program. It is very important what type of signal he will give for the future actions of the ECB and if the QE stimulus will be extended and by how long. The analysts are expecting that Draghi will keep rates unchanged for now but it communicate an extension of the stimulus from 3 to 6 months more, but this might be last step before starting to tighten the policy after that.

Various representatives from the ECB, including Draghi have communicated on more than one occasion that at the end the monetary policy will come back to normal levels, however how fast this will happen depends on the actions of all government to try to stabilize the Euro zone.

Due to the upcoming elections in some of the bigger countries, any attempts to make reforms is highly unlikely. The popular movement is also having a negative effect of the euro integration, that is why the Central Bank needs to take more unconventional type of action and for longer.

The Global Strategist at Societe Generale SA in London Kit Jones, that Draghi needs to be vague in the details and this is a trick in order to balance the expectation in regards to the start of reducing the QE.

The information agency says that during October, Draghi commucated that long term inflation will be reaching 2% in the beginning of 2019, but this will depend largely by the QE program.

In the interview, published last week, the Draghi gave a hint that the QE may continue for longer but in smaller size.

Up till now the EU is proven strong and more stable to any political uncertainties from both sides of the Atlantic. The Employment rate fell quickly and it is already below the level that the ECB expected for this year.

However, he also said that the risks are not over ahead for the economy, as the last problem arises from Italy due to the referendum there and the problems with the banks, Donald Trump winning the Presidency and Brexit.

MarketWatch is warning that the balance is already reached by the ECB and problems may start to arise. Economics and Politicians agree that the Central Bank needs to decide on the QE quickly.

Every time this issue is discussed risks the investors patience in such a delicate moment in European political situation. Italy may face large issues if QE is slowed. The Interest rate payments of the country are already bigger by 1/3 of the Economy itself and they may go up and to put Italy in very bad situation and Euro Zone.

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