Further ECB easing likely in December

In an interview published Saturday by the Italian paper Il Sole 24 Ore, ECB President Draghi said the ECB would take all actions necessary if they are convinced that the medium term inflation objective is at risk. 

At present, the ECB expect HICP to reach 1.7% by 2017. This is at the high end of the latest update from Consensus Economics, with a range of 1.2% to 1.7% and the median at 1.5%. The consensus median only reaches the 1.7% in 2019. 

"For 2019, it is forecasted at 1.5%, compared to the consensus range of 1.4% to 2.1%. As such, while the inflation is likely to turn higher, it is at a much slower pace than factored in by the consensus or, for that matter, the ECB", says Societe Generale. 

President Draghi, however, seems to have rolled back some of his previous dovish tone in the Il Sole 24 Ore interview, noting that it remains on open question whether further stimulus is needed.


"Euro area inflation, has been the basis for the long held view that the ECB would deliver further unorthodox monetary policy stimulus. Previously this is expected to be delivered in spring 2016, but following last week's disappointing loan data and a batch of dovish speak from ECB members, further easing is expected in December", added Societe Generale.