That just reaffirms the message from Lagarde earlier
The forecast he is mentioning is between the ECB’s ‘medium’ and ‘severe’ scenarios, which Lagarde already made a similar mention to earlier here.
In any case, this sets up expectations ahead of their June meeting that all of this will be factored into the staff projections and that more stimulus may accompany it – as they rule out their ‘mild’ scenario from before.
Just be reminded that PEPP should meet its target some time around September or October, so the ECB should communicate an increase in the size sooner rather than later.
Despite the additional easing in nature, the reassurance should keep market participants satisfied that they are willing to do more to ensure financial conditions stay as they are. Remember, “close the spreads”.
All eyes on Lagarde now
The ECB statement was a non-event as expected, with the language on inflation and policy kept similar to the December meeting.
The ECB did officially announce its first strategic review in nearly two decades though and has taken some of the heat away from Lagarde ahead of her press conference; they say that they will provide further details on the scope and timetable later today at 1430 GMT.
As such, the focus of Lagarde’s press conference will be more skewed towards her tone and view on recent changes to the economic outlook i.e. improving data and the US-China trade deal – unless of course she decides to chime in on strategic review questions.
You can watch her live later here:
Lagarde will be speaking at the European Banking Conference in Frankfurt
She will be delivering the keynote address to begin the event, right after the welcome/opening addresses which are scheduled for around 0800 GMT.
It has already been three weeks into her tenure as ECB president but Lagarde has yet to share any firm views on monetary policy and her strategic plans for the central bank.
Given the context of the occasion above, perhaps she may not delve too deep into monetary policy remarks but I wouldn’t be surprised if she does bring up a mention or two just to appease the crowd – and markets for that matter.
If she still keeps mum today, the next time we’ll see her speak will be during the press conference after the 12 December monetary policy meeting.