Preview of June 14th ECB meeting
Following Mr. Praet’s speech last week, expectations have increased on QE tapering, especially considering his previous dovish stance. There is now a possibility that the ECB will confirm tapering at €15Bn / month during Q4 2018, with QE ending in December. However, we think it would make more sense for the ECB to wait until July to give more information on the specific timing and size.
The ECB should raise its 2018 and 2019 inflation forecasts, taking into account strong figures in May and rising commodity prices. Regarding growth, forecasts could be lowered marginally after disappointing data over the last 3 months.
Overall, with the recent repricing following Mr. Praet’s comments, we do not expect meaningful movements except if the ECB announces when it will cease asset purchases.