Goldman Sachs believes that Draghi is unlikely to use his Jackson Hole speech to give any new policy direction

The accounts of the July ECB meeting generated some buzz in FX markets when they revealed that “concerns were expressed about the risk of the exchange rate overshooting in the future.” Whenever interpreting unattributed meeting minutes, we think it is important to keep it in context. In this case, President Draghi was asked directly about the exchange rate in the post-meeting press conference and only said that it has received “some attention” and there have been “various exchanges of views.”

In our view, the more concrete message from the minutes was that “The Governing Council would, in the autumn, consider the future course of its monetary policy and, in particular, its strategy for asset purchases beyond the currently communicated horizon.” This is in line with our economists’ longstanding view and our discussion last month that Draghi would be unlikely to use his Jackson Hole speech to give a new policy direction. This was further reinforced by a Reuters article this week, citing unnamed ECB sources, although there are still some expectations for a more substantial policy update.

22 Aug 2017 - 15:05- Fixed IncomeBank Speaker- Source: Goldman Sachs

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