ECB needs to show it believes in its policy - Nomura

Research Team at Nomura, thinks that the ECB’s projections for the September meeting should show potential downside risks on growth.

Key Quotes

“They should also essentially show unchanged forecasts on inflation, to the extent that the ECB chooses, as in June, not to incorporate in its projections the increase in oil prices. We think the projections in September need to convey some confidence in the framework that the ECB is following, in particular in terms of reaching its inflation objectives.

We think one potential way of conveying such confidence would be to combine increased accommodation and a slight upward revision in the 2018 inflation projections closer to the 1.8-2.0% range. Such a change would be consistent with our call that the ECB will increase accommodation further.”