ECB: Draghi’s policies to continue and fiscal expansion to be pushed – Westpac

Tim Riddell, analyst at Westpac, points out that the ECB president-elect Lagarde’s presentation to the EU Parliament indicated that she will continue Draghi’s policies and will also push for fiscal expansion within the region.

Key Quotes

“Draghi’s indication of a concerted stimulus package at the ECB’s Sep appeared to be affirmed by ECB Governing Council members Lane and Rehn, but more hawkish members Knot, Weidmann and Lautenschlaeger have recently highlighted potentially deep divisions over further ECB stimulus.”

“Data into next week’s ECB meeting and the ability of Draghi to gain support for a swansong stimulus will be critical for both the handover to Lagarde and EUR.”

“Recent declines in global sentiment, expectations of ECB easing and veiled threats over US-EU trade have seen EUR/USD breach 1.10 support. If ECB credibility is affirmed, a new 1.08-1.12 range could develop.”