Draghi’s last act likely to disappoint

Aegon Asset Management
By October 4, 2019 13:07

Draghi’s last act likely to disappoint

On September 12 the Governing Council of the ECB announced an extensive package of the monetary stimulus. It includes a deposit rate cut to -0.5%, the asset purchases program restarting November 1st, two-tier system for banks and easing of the TLTROs conditions. Although the rate cut of only 10 basis points and EUR 20 bln per month of APP looked like the lower limit for the market estimates, the overall tone of the ECB’s statements perceived as more dovish than expected. After the initial announcement, the bond market rallied, notably in the periphery countries. However, the following press conference and released details caused a selloff, especially in the front-end of the curve. The ECB has decided to use a package of the familiar tools like rate cut, QE, and TLTRO, but also to introduce a new measure: a tiering system for banks. 

Aegon Asset Management
By October 4, 2019 13:07

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