Will he, or won’t he?

Today’s ECB meeting is when Mario Draghi unveils the “guidance switch”, hinting if not at the (eventual) interest rate increase then at least a small step toward a QE exit; that was before Bloomberg’s trial balloon hit.

As reported earlier, a Bloomberg “sources” story suggested that the ECB will cut its inflation forecasts to 1.5% (from 1.7%, 1.6% and 1.7% for 2017, 2018 and 2019, respectively). If confirmed, this would be rather dovish, and may put any “switch-over” plans on indefinite hold. According to SocGen, although the report cites the recent fall in energy prices behind the forecast change, this wouldn’t explain the two-tenths change for 2019, which would need to be explained by a downward revision of core inflation (which remained very optimistic at 1.8%).

The other key elements to focus on will be the risk assessment for growth and the rate guidance. On the first one, the ECB is expected a move to a “broadly balanced” risk profile. That is understandable given the recent trend in business confidence and progress in labour markets. Analysts also expect the ECB to drop the “or lower” and a dropping of the word “well” in “well past.”

That’s the short preview version. Below, courtesy of ABN Amro is the longer one.