ECB Leaves Rates Unchanged As Expected But Announces New TLTRO

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    Helmholtz Watson

    ECB interest rates on the main refinancing operations…


    Helmholtz Watson

    Draghi opening statement:


    ECB decision aimed at lifting inflation
    Underlying inflation is expected to increase over the medium term
    Underlying inflation remains muted
    Some idiosyncratic factors hurting growth are starting to fade
    Incoming data have continued to be weak, particularly in manufacturing
    Other factors will extend through the year
    Protectionism and political tensions are weighing on sentiment
    Governing Council stands ready to adjust all instruments as appropriate
    Slowdown is largely due to slower external demand but also country-specific factors
    Risks to economic outlook still tilted to the downside
    Inflation to decline towards the end of the year
    Labor-cost pressures have strengthened and broadened

    Helmholtz Watson

    [color=red][b]ECB Cuts Growth Forecasts Significantly
    2019 GDP at 1.1% vs 1.7% in January forecast
    2020 GDP 1.6% vs 1.7% prior
    2021 GDP 1.5% vs 1.5% prior

    2019 1.2% vs 1.6% prior
    2020 1.5% vs 1.7% prior
    2021 1.6% vs 1.8% prior

    Helmholtz Watson

    [b]Draghi Q&A:
    There no discussion about restarting QE or cutting deposit rate
    TLTRO loans are only somewhat more favorable than the market
    ECB will announce full details of TLTRO in due time

    In the coming years we will have a congestion of bank funding
    We made four sets of decisions
    We moved the calendar-based guidance to December from Sept
    New measures are adding accommodation
    ECB monetary policy is even more accommodative now

    Decisions were made following large downward revisions in forecasts
    Decisions were unanimous, which I think is a very positive sign of our cohesiveness
    We are in a period of continued weakness

    Chances of eurozone recession are very low
    Chances of inflation deanchoring is very low

    External factors continue to weigh on economy
    ECB discussed changing forward guidance to March 2020


    Bloomberg reporting on TLTRO

    ECB said to be leaning to TLTRO rate at premium over benchmark
    Some ECB officials are said to doubt 2019 outlook was lowered enough
    ECB said not to rush for TLTRO details as soon as April


    Euro continues lower to 1.1180 $EURUSD after ECB Announces New #TLTRO Broke 1.1240 and 1.1280

    Supports Nearly full #MurreyMath +3/8 to -3/8 Fractal


    Germany economy minister Altmaier

    Europe wants to avoid trade war with US
    Negotiations should lead to lower tariffs
    Europe is ready to respond to higher US tariffs with own measures


    Eurozone Flash PMI falls to 51.3 (51.9 – Feb), manufacturing primary drag – data pointing to steepest downtown in sector for 6 yrs.

    Q1 survey data indicates GDP rose 0.2%

    Key findings:

    ▪ Flash Eurozone PMI Composite Output Index(1)
    at 51.3 (51.9 in February). 2-month low.
    ▪ Flash Eurozone Services PMI Activity Index(2) at 52.7 (52.8 in February). 2-month low.
    ▪ Flash Eurozone Manufacturing PMI Output Index(4) at 47.7 (49.4 in February). 71-month low.
    ▪ Flash Eurozone Manufacturing PMI(3) at 47.6 (49.3 in February). 71-month low.

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