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Until the end, M. Draghi should remain dovish

22 October 2019

M. Draghi, who will attend the last Governing Council meeting of his eight-year term as ECB president on October 24, should reiterate that monetary policy alone cannot resolve everything and that since inflation is still too low, fiscal policy should play a bigger role.

Until the end, M. Draghi should remain dovish

The risk balance should remain the same and M. Draghi will certainly communicate about downward revision risks in upcoming economic forecasts in December: indeed, according to the minutes of the latest ECB meeting we believe growth forecasts are too optimistic, especially given prolonged uncertainties like the ongoing trade war and Brexit.
Many measures, already announced during September’s press conference, will be implemented in the coming weeks. M. Draghi will probably come back on dissensions among the ECB members, as some of them expressed publicly their skepticism about the new bond-purchase program and the inflation target and suggested to include goals other than inflation or to define a range around the ECB inflation target.
In conclusion, we expect M. Draghi to be dovish until the end of his mandate.


Disclaimer
This commentary is intended for professional investors only within the meaning of MiFID II. It is provided for informational and educational purposes only and is not intended to serve as a forecast, research product or investment advice and should not be construed as such. It may not constitute investment advice or an offer, invitation or recommendation to invest in particular investments or to adopt any investment strategy. Past performance is not indicative of future performance. The opinions expressed by La Française Group are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française AM Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. La Française Asset Management was approved by the AMF under no. GP97076 on 1 July 1997.

 

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