Here are five things to watch for from Mario Draghi on Wednesday. The European Central Bank president holds a press conference at 2:30 p.m. in Frankfurt.
The ECB began large-scale asset purchases in March and said national central banks scooped up 61.7 billion euros ($66 billions) of government and public-sector bonds as of April 10. The ECB president may be asked about the chances of an early exit from the program.
The ECB predicts inflation will rise to 1.8 percent in 2017, in line with the central bank’s mandate of just below 2 percent. Draghi has stressed that the forecast assumes the full implementation of the bond-buying program. Draghi might be questioned on this and, in general, on the effect of QE on the inflation path. The persistent weakness in core inflation, which discounts volatile factors such as energy and food, is also a cause for concern. The indicator matched its lowest level on record in March, falling to 0.6 percent.
Investors fret that the ECB’s self-imposed ban on buying bonds with yields below the deposit rate, currently set at minus 0.2 percent, will lead to a reduction in the supply of purchasable assets, as yields across the term curve continue to fall.
The Greek government is supposed to present a detailed reform agenda at a meeting of euro-area finance ministers next week in Riga as concern over the risks of the country’s exit from the currency bloc mounts. While Draghi will probably be questioned on these risks, he will also be called to comment on emergency funding available to Greek banks.
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