ECB WATCH | Dovish and hawkish tones in the same package

ECB’s first policy meeting after its monetary policy strategy review was marked by a lack of unanimity, likely reflecting an intense discussion between the doves and the hawks.

Key points

• Key points:
• Changes in forward guidance on rates towards a more dovish exit, given stronger conditions to ensure that inflation meets the new target
• However, there was no decision on QE and a potential transition to avoid the cliff of PEPP withdrawal in March 2022, as it was expected
• Risks are balance on an outlook which is more positive but with the uncertainty of the Delta variant of Covid

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