4 Dec 2013
Flash: EUR; ECB on hold, but dovish - BAML
FXstreet.com (London) - Bank of America and Merrill Lynch stratgists said following the ECB cut of its refi rate by 25bp in November and the extended 3m MRO at fixed rate full allotment until July 2015, markets have been looking for the next ECB move.
Key Quote:
“We expect therong>ECB to be on hold but with a dovish tone and slightly more bearish projections tomorrow, which should have a limited market impact.”
“We see another rate cut, including for deposits, in 1Q14 if disinflation resumes, but this is a risk to our baseline for now”.
“A new LTRO is likely in 1H if funding pressures intensify during the Asset Quality Review. We discuss all possible ECB actions, their probability and market impact”.
“In our view, the next move will likely take time, as the ECB has signalled that (1) it is looking at a large array of options, but (2) economic and financial conditions do not warrant using these options yet”.
“Such options include interest-rate cuts and expanding the ECB balance sheet”.
Key Quote:
“We expect the
“We see another rate cut, including for deposits, in 1Q14 if disinflation resumes, but this is a risk to our baseline for now”.
“A new LTRO is likely in 1H if funding pressures intensify during the Asset Quality Review. We discuss all possible ECB actions, their probability and market impact”.
“In our view, the next move will likely take time, as the ECB has signalled that (1) it is looking at a large array of options, but (2) economic and financial conditions do not warrant using these options yet”.
“Such options include interest-rate cuts and expanding the ECB balance sheet”.