6 Jun 2013
Flash: Less Pressure on ECB to rate cut - DBS Group
FXstreet.com (Barcelona) - DBS Group analysts note that the slight improvement in the business confidence indices, pick-up in May PMI and already-priced in weak 1Q13 GDP growth numbers lowers the pressure on the ECB to reduce the benchmark rates on Thursday.
They feel that after the 25bp cut at the May review, they expect the main refinancing rate to be left unchanged at 0.5% which will leave the deposit facility rate steady at 0% as the recent discussions on the merits of such a move have been largely inconclusive. They add that there has concurrently been a lot of speculation on additional measures to jump start the credit market, including plans to possibly buy asset-backed securities to facilitate SMEs and banks, though no concrete progress was noted in the run-up to the rate review today. They write, “Focus will meanwhile be on the growth and inflation guidance by the central bank due alongside the rate announcement. At present, 2013 GDP growth is estimated at-0.5% and annual HICP guidance at 1.2%-2.0%.”
They feel that after the 25bp cut at the May review, they expect the main refinancing rate to be left unchanged at 0.5% which will leave the deposit facility rate steady at 0% as the recent discussions on the merits of such a move have been largely inconclusive. They add that there has concurrently been a lot of speculation on additional measures to jump start the credit market, including plans to possibly buy asset-backed securities to facilitate SMEs and banks, though no concrete progress was noted in the run-up to the rate review today. They write, “Focus will meanwhile be on the growth and inflation guidance by the central bank due alongside the rate announcement. At present, 2013 GDP growth is estimated at-0.5% and annual HICP guidance at 1.2%-2.0%.”