Monex: Vooruitblik ECB vergadering - ECB blijft worstelen met neerwaartse risico’s

Apr 8, 2019

Hieronder volgt een vooruitblik in het Engels van Bart Hordijk, valuta-analist bij Monex Europe, op de beleidsvergadering van de ECB woensdag a.s.. De risico’s in de maakindustrie blijven aanwezig, terwijl de consumenten en dienstensector hoop bieden. Sommige leden van de  Gouverning Council van de ECB menen dat de risico’s voor de economie gebalanceerd zijn. Dit is wel erg optimistisch, hoewel de vooruitzichten ten opzichte van de bijeenkomst op 8 maart licht verbeterd zijn. Aangezien de negatieve risico’s nog steeds overheersen, is woensdag een terughoudende ECB te verwachten, wat kan zorgen voor enige eurozwakte rond de bijeenkomst.

ECB meeting preview: Dovish risks are stacking up for the already strongly accommodative policies of the European Central Bank. Especially signs from the manufacturing sector are not constructive for a swift exit from ECB’s stimulating monetary policy, with for example German Industrial Production and Factory Orders again pointing towards a contraction in Q1 after the 1.1% decline in Q4. New Factory Orders even slipped at the fastest pace  since the Great Financial Crisis, driven down mostly by a slump in external demand, although domestic demand declined as well.

A ray of hope does shine from the consumer sector, though, with Retail Sales pointing to another solid quarter, with February year-on-year RS growth being a strong 2.8%. Moreover, Purchasing Manager Indices show an increasing divergence between the Manufacturing and the Services sector. Together with RS growth, this would provide some upside risks to the current 1.1% growth forecast of the ECB for 2019 – assuming the prospects of the manufacturing sector improve. As surveys do not signal this, and manufacturing may even start to have a stronger negative impact on the services sector, we consider the 1.1% ECB growth forecast to be reasonable one still. A change in global trade sentiment can quickly reverse the negative situation in the Eurozone manufacturing sector, as China and the US appear to slowly edge closer towards an agreement. However, the US may also choose the European Union as their new trade war target as the main issues with China are resolved, which can quickly dampen sentiment again.

In the ECB’s most recent meeting minutes it was noticed that some Governing Council members even contemplated to state risks to the Eurozone growth outlook are balanced. We think this is optimistic, although thanks to positive signals from consumers and the services sector, risks appear to have improved somewhat compared to the March ECB meeting. For this week’s ECB meeting we do not expect any major policy shifts, especially after the strong downwards growth and inflation adjustments of last meeting. We do, however, expect some technical adjustments. We expect more clarity on how the Targeted Long Term Financing Operations will be implemented. Additionally, we foresee Mario Draghi will share it has been discussed how banks can be shielded from the negative impacts of long run negative interest rates, for example by wavering some bank deposits at the ECB from these negative rates (a.k.a. tieirng). On a balance, we expect the ECB meeting to edge on the side of dovishness, albeit not strongly, which can bring some minor downwards pressure on the euro.