ECB: a balanced assessment of growth outlook to come? - Nomura

Analysts at Nomura explained that even though lower inflation forecast, if correct, would suggest a higher risk of no changes in the forward guidance for now,
they expect the ECB would still progress towards normalization of monetary policy.

Key Quotes:

"Although the downgrade to around 1.5% headline inflation forecast for 2019 still sounds a bit dovish, it is unlikely to change the core inflation forecast materially based on the article."

"In addition, the ECB is likely to raise its growth forecast with a more balanced assessment of growth outlook, which we believe justifies the positive view on core inflation outlook, even after downgrading headline inflation owing to the energy price impact."

"We reiterate our forecast of QE tapering announcement at the September meeting for implementation at the start of next year. And that, in turn, will likely pave the way for a modest 10bp depo rate hike in the latter half of next year."