January 30, 2019
FRANKFURT (Reuters) – The European Central Bank is launching a survey of market economists to gauge policy expectations, it said on Wednesday, as it increasingly relies on how investors interpret its guidance on both conventional and unconventional instruments.
Starting in April, the ECB will ask market players before each policy meeting about their expectation of the “evolution of key policy parameters”, the ECB said in a statement.
The ECB’s forward guidance describes future, often distant policy moves, and the bank relies on the market to set financial conditions based on their interpretation of this guidance.
While the ECB now guides for steady rates at least through the summer, expectations for a rate hike been pushed out to mid-2020 from late 2019, prompting ECB President Mario Draghi to say that the shift suggested that markets understood how the ECB would react to deteriorating growth conditions.
Forward guidance is still a relatively new tool and while the U.S Federal Reserve signaled a declining role such an instrument, the ECB has increased the emphasis.
The new survey will run in a pilot phase for the first year, after which the bank will publish its results.
Survey participants will be picked from members of ECB’s market contact groups, which include some of the world’s biggest financial institutions, such as commercial banks, insurers, investment banks, and asset managers.
(Reporting by Balazs Koranyi; Editing by Alison Williams)