Thursday preview: ECB to reveal policy with QE in focus
Following a quiet start to the week, the pace is set to pick up on Thursday with a batch of economic data releases and the European Central Bank’s policy decision.
Economists anticipate the ECB will keep interest rates, the deposit facility and the marginal lending facility unchanged at 0.05%, -0.20% and 0.30%, respectively.
While there are expected to be no surprise changes at the policy announcement, the market will be focused on whether ECB president Mario Draghi signals further stimulus at his press conference following the bank's governing council meeting.
Draghi is likely to provide an update on the €60bn-a-month asset-purchase programme amid speculation the ECB will extend it past September 2016 to address prolonged low inflation, a stagnant Eurozone recovery and risks from slowing emerging markets.
The ECB’s October Bank Lending Survey on Tuesday revealed a loosening of credit conditions for firms and stronger demand for loans, which was seen by analysts as suggesting the effects of QE on bank lending were working.
On Monday two members of the ECB expressed resistance to the expansion of the QE programme. ECB council member Ewald Nowotny told local media that an extension was something "we'll discuss when there's a need”.
Fellow ECB member Christian Noyer told French television that QE was working well and indicated that the €60bn month until next September was enough to turn the economy around.
“In a nutshell, the key message of the governing council's stance is that whilst weakness in demand in emerging markets is not something that is about to go away anytime soon and that downside risks to the economy have increased, it is too early to draw a firm conclusion with regard to the need for fresh policy measures,” according to Rabobank.
The Eurozone will also see the release of consumer confidence data which is expected to show a decline in October to -7.4 from -7.1 the prior month.
In the UK, retail sales will make headlines with analysts predicting a 4.7% increase in September compared to the same month a year ago, following a 3.5% increase in August.
Stateside, reports will include initial jobless claims, the house price index and existing home sales
Thursday 22 October
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INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Consumer Confidence Indicator (EU) (10:00)
Continuing Claims (US) (13:30)
ECB Interest Rate (EU) (12:45)
Existing Home Sales (US) (15:00)
Initial Jobless Claims (US) (13:30)
Leading Indicators (US) (15:00)
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TRADING ANNOUNCEMENTS
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UK ECONOMIC ANNOUNCEMENTS
Internet Retail Sales (09:30)
Retail Sales (09:30)
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