In reaction to the European Central bank (ECB) meeting today, Timothy Graf, head of macro strategy at State Street Global Markets; and Antoine Lesné, EMEA head of ETF strategy at SPDR ETFs, part of State Street Global Advisors, offer their views.
Graf commented: “Today’s remarks from ECB President Draghi offered few surprises. The tone to European data has clearly been positive this year and should support the single currency and European risky assets in to the second half of 2017. Nevertheless, with headline inflation rates rolling over and core inflation still subdued, the central bank does not need to hurry in removing accommodation. Today’s announcements largely met expectations, so recent euro strength will likely hold; however, with euro bullishness having become something of a consensus view in recent weeks, a turn back towards sustained higher inflation is likely required to extend these gains.”
Lesné commented: “No real surprise! ECB President Draghi’s remarks highlighted the optimistic tone of European data. This has clearly been a positive surprise this year and should support European risky assets into the second half of 2017, if the political agenda does not surprise on the downside. However headline inflation rates have started to roll over in May and core inflation continues to hover around 1 percent. The ECB will not be in a hurry to remove its accommodative stance. Today’s forward guidance may be seen as more balanced and, largely meeting expectations. The positive performance of risky euro assets may continue as long as the term ‘taper’ is not uttered too loudly.”