ECB prepares easing package for December

Draghi pointed towards action at the next ECB policy meeting by saying "the degree of monetary policy accommodation will need to be re-examined at the December monetary policy meeting, when the new Eurosystem staff macroeconomic projections will be available." Also during the Q&A session, it became clear that the ECB is planning something big. "We are not in wait-and-see, but in work-and-assess mode."

Draghi linked the ECB's credibility to the attainment of the inflation target, not to his former words, that the lower bound has been reached. We think, he could not have been much clearer in signalling that further stimulus is coming.

No policy action today from the ECB, as expected, but big markets moves after very soft words from Mario Draghi and clear hints towards easing in December. A package including more and longer QE and now also a 10 bp cut in the deposit rate likely in the December meeting, says Nordea Bank. That dovish message leaves yields more room to fall along the curve, but not by any huge amounts. The euro has more downside potential.