ECB is most likely to hold fire - Westpac

Research Team at Westpac, suggests that after a very quiet summer, debate over policy in Europe will start to build momentum again this week as the ECB meets.

Key Quotes

“Overall, available data calls for a steady hand. Confidence has moderated somewhat; but modest gains continue to be made in the labour market, while the PMI's are pointing to further moderate growth into Q3 – albeit only at Q2's 0.3% pace.

Of course, inflation is the ECB's focus. There, while the annual headline rate remains near zero, the acceleration seen in the 6-month pace (mostly on base effects) justifies holding off on any further action for now.

Instead, the ECB is most likely to hold fire on an extension of the duration of the asset purchase program for another few months and (again) focus the market's attention on the need for fiscal authorities to do more. A further increase in the purchase pace is off the table until 2017.”