5 Feb 2014
Flash: ECB to hold off easing until March? - BTMU
FXStreet (Barcelona) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ suspects that the ECB may hold off easing measures until updated forecasts are agreed for the March meeting.
Key Quotes
"The data calendar is pretty light in Europe today and the main focus will be on the PMI Services reports which are likely to confirm what we have seen in the manufacturing reports – further recovery momentum. Still, we don’t think this evidence of recovery makes much difference to the downside risks to price stability in the euro-zone."
"The ECB in the latest forecast projections is expecting real GDP growth to strengthen this year, to 1.0%. But as the ECB acknowledges in its unemployment rate forecast of 12.0% this year, that level of growth will not be strong enough to reduce unemployment. Therefore, we maintain that further monetary action will be required by the ECB. It is a close call whether action is taken tomorrow but we just about lean toward a delay in action at least until the updated forecasts are agreed for the March meeting."
Key Quotes
"The data calendar is pretty light in Europe today and the main focus will be on the PMI Services reports which are likely to confirm what we have seen in the manufacturing reports – further recovery momentum. Still, we don’t think this evidence of recovery makes much difference to the downside risks to price stability in the euro-zone."
"The ECB in the latest forecast projections is expecting real GDP growth to strengthen this year, to 1.0%. But as the ECB acknowledges in its unemployment rate forecast of 12.0% this year, that level of growth will not be strong enough to reduce unemployment. Therefore, we maintain that further monetary action will be required by the ECB. It is a close call whether action is taken tomorrow but we just about lean toward a delay in action at least until the updated forecasts are agreed for the March meeting."