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19 Sep 2014
ECB’s QE closer? – Danske Bank
FXStreet (Edinburgh) - In the opinion of Jens Pedersen, Senior Analyst at Danske Bank, the recent poor data from the TLTRO potentially opens the door for further easing measures.
Key Quotes
“Yesterday’s TLTRO uptake disappointed with euro-zone banks only taking EUR82.6bn”.
“Today’s LTRO repayment is crucial in determining excess liquidity when it settles next week, where a large repayment will result in less liquidity being injected from the first TLTRO”.
“How does this fit with ECB efforts of expanding its balance sheet? At the margin this suggests that the TLTRO will be less successful in boosting the balance sheet and the ECB will thus have to look at other sources”.
“First in line are the announced ABS and covered bond purchase programmes”.
“However, our covered bond analysts believe it will be difficult to achieve significant size in these programmes near term, and this leaves QE in government bonds more likely”.
Key Quotes
“Yesterday’s TLTRO uptake disappointed with euro-zone banks only taking EUR82.6bn”.
“Today’s LTRO repayment is crucial in determining excess liquidity when it settles next week, where a large repayment will result in less liquidity being injected from the first TLTRO”.
“How does this fit with ECB efforts of expanding its balance sheet? At the margin this suggests that the TLTRO will be less successful in boosting the balance sheet and the ECB will thus have to look at other sources”.
“First in line are the announced ABS and covered bond purchase programmes”.
“However, our covered bond analysts believe it will be difficult to achieve significant size in these programmes near term, and this leaves QE in government bonds more likely”.