Europe

At the July press conference, the ECB introduced what markets have interpreted as a form of forward guidance on monetary policy, saying that the stance of monetary policy will remain accommodative ‘for as long as necessary’. But in contrast to the US Federal Reserve's forward guidance, the ECB gave no explicit targets concerning, for example, the unemployment rate. Overall, we regard this change in communication policy as relatively small. Although financial markets initially welcomed the ECB comments, we do not believe any change in our forecasts is warranted in response to them…