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Some economists also believe that it is possible that Italians more concretely summarize the interest rate outlook. However, most experts believe that it is more likely that the European Central Bank (ECB) remains flexible and thus avoids more precise wording after the Council meeting in Frankfurt. With the ECB management setting the course in June and announcing the end of its trillion bond purchases at the end of the year, it is unlikely that important decisions will be taken this time around. Key interest rates, which are already at the 0.0% lows since March 2016, are unlikely to shake monetary authorities.
The last meeting of the ECB before the summer holidays should be overshadowed by the trade dispute with the United States. If this spiral resulted in a spiral of ever-changing tariffs and counter-rights, the European economy could weaken significantly. For Draghi, this would come at an inconvenient time, as Euro-observers are moving to a less favorable monetary policy. "The warning of an escalation of the trade dispute could therefore be a bit stronger, not to mention the word auto rates," says chief economist Holger Schmieding of Berenberg Bank.
Special rates on cars would be particularly sensitive to Germany. The President of the European Commission, Jean-Claude Juncker, will try Wednesday in Washington to persuade US President Donald Trump to redirect his activities.
Draghi will also face some critical questions about the interest rate outlook. Daniel Hartmann, Chief Economist of Bantleon Bank. It was recently disconcerting that the ECB subsequently changed the translations into certain languages in June. Euro-observers had announced that they would maintain their key interest rates at the current level until at least "beyond the summer" of 2019. That's what what does the German version of the outlook say? The reference at the end of the summer of 2019 was removed by the ECB
It does not appear clearly in the minutes of the June interest rate meeting if the members of the Council have long struggled on the precise wording. "Due to the expected market importance, this seems careless," says Stefan Kipar, analyst at BayernLB. According to internal sources, central bankers have very different views as to whether the current version would raise rates as early as July 2019 or later in September or October. Economists at Danske Bank believe that the ECB will only be more specific about its outlook next year.
Investors also want to know how Mario Draghi will determine the future reinvestment of his income in bond purchases. According to insiders, it is planned to reinvest the funds from the maturity papers in securities in the longer term in the future. "Such a reinvestment approach would help ensure that long-term returns remain firmly anchored at a low level," says Christian Dz Bank's interest rate expert Christian Reicherter. However, many economists doubt that the ECB is focusing more on the cards this week.
(Reuters)
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