ECB minutes reaffirm intention to see QE through

The minutes of the ECB's monetary policy meeting on 15th April underscore the message already given by Mario Draghi and colleagues, in the press conference after the meeting and in subsequent speeches, that the Governing Council firmly intends to implement its quantitative easing (QE) programme in full. Although members agreed that the ECB's policy measures were "working as intended", they stressed again that forecasts of stronger growth and higher inflation were "predicated on the full implementation" of the measures and that their full effects would take time to unfold.

They also appeared to dismiss recent concerns that QE might be increasing market volatility due to a scarcity of supply in some bond markets, most obviously German bunds, and were in "wide agreement" that QE was progressing smoothly. Admittedly, the main rise in bund yields has come since the meeting, but we suspect that it is unlikely to have altered the Governing Council's position materially. Meanwhile, the softer tone of some of the economic data since the meeting, including this morning's euro-zone PMI, is likely to have reinforced the ECB's intention to see QE through in full, as might the rise in the euro exchange rate. In short, QE looks set to continue at least until next September, and quite possibly beyond.