Bank of America Global Research discusses its expectations for tomorrow's ECB policy meeting.
"The ECB meeting this week offers an opportunity to signal how the new Strategy will affect the conduct of monetary policy. We expect the ECB to change its forward guidance to signal that accommodation (rates and APP) will be more persistent (not more forceful) with the new Strategy. We don't expect clarity on PEPP tapering or the quantum of APP when the PEPP ends. We may even need to wait until December for both. A more prominent role for financial stability means "or lower" for rates would be eventually dropped, potentially as soon as this week," BofA notes.
"Forward guidance will matter for curve and duration, while APP/PEPP transition will matter for spreads, in our view. The ECB's multistep approach to decide all the policy details to back the Strategy Review means a downward, but choppy EUR path for the rest of the year," BofA adds.