ECB Bank Lending data released today – MUFG

Derek Halpenny, European Head of GMR at MUFG, suggests that the quarterly Bank Lending Survey will be released today and while not a market mover is always an important report given the emphasis the ECB places on the report.

Key Quotes

“President Draghi has cited the report in the past as providing evidence of the success of QE. Given the turmoil in Italian banks over recent months, the report may provide insight into the impact of that uncertainty.”

“Weak banks and political uncertainty are two factors that will ensure the ECB maintains its dovish bias even in circumstances of evidence of rising inflation. ECB Executive Board Member Praet spoke in Paris yesterday and emphasised that the focus of policy remains avoiding a slip into “a sort of deflationary trap” which was still possible given the length of the crisis was a “really big problem”.”

“The ECB meets later this week and today’s BLS may well shape to some degree the tone of communications although Praet’s comments yesterday signal the ECB remains focused on downside risks to price stability. While those risks may have begun to shift we suspect the shift is too recent to prompt any notable shift in ECB policy bias. Continued dovishness this week will help limit EUR upside from here.”