ECB Said To Study QE ‘Scenarios’ For 2018 – Decision Not Expected Before October

Here we go with the ECB headlines.

According to “officials familiar with the matter,” the Governing Council is looking at some “documents” that outline a variety of scenarios for “adjusting” QE.

Now you can assume that “adjusting” means winding down, but then again, it could also mean changing the parameters to get around capital key constraints in the event they find themselves breaching technical limits.

The euro is chopping around on this:

EURUSD

A decision doesn’t currently look likely before the Governing Council’s Oct. 26 meeting,” Bloomberg reports, citing the same unidentified sources.

And that right there is key as it pretty much rules out anything definitive for tomorrow. Here’s another notable bullet:

  • Governing Council will also look at the parameters of QE, including constraints dictated by European law and the ECB’s self-imposed choice of asset classes, to gauge how much room they have for purchases.

So that’s the parameters bit mentioned above.

Long story short, they have no idea what they’re going to do here because between NIRP, PSPP, and CSPP there are so many different dynamics at play in markets that the consequences for even small tweaks are completely unpredictable.

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