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3 Jun 2014
ECB possible outcomes – FXStreet
FXStreet (Guatemala) - Valeria Bednarik, Chief Analyst with FXStreet looked into the ECB coming up this week.
Key Quotes:
"The European Central Bank is expected to implement some sort of facilities in order to boost economy and diminish the risk of disinflation, yet they have been talking about it for so long, market players had already priced in most of it”.
“The ECB has a suite of policy options to deploy”,
“Market has priced in a combination between another round of LTROs, a cut in the main rate currently at 0.25% and/or a cut down to negative on deposits rate, this last as a way of stimulating consumption”.
“It’s important to notice the ECB's founding treaty prohibits it from buying government bonds in the primary market”.
“Nevertheless, and considering overnight rates are now at 0.0%, a widely expected cut in it would only have a limited impact on money-market rates in the currency bloc”.
“What may really have a strong impact is if the ECB finally turns on the printing machine to buy assets, something market is not counting on”.
“We will be on a scenario where the US is ending its QE while the EU is barely starting it: the imbalance among both economies will put the common currency under pressure and boost greenback across the board, yet the EUR will likely suffer against all of its rivals."
Key Quotes:
"The European Central Bank is expected to implement some sort of facilities in order to boost economy and diminish the risk of disinflation, yet they have been talking about it for so long, market players had already priced in most of it”.
“The ECB has a suite of policy options to deploy”,
“Market has priced in a combination between another round of LTROs, a cut in the main rate currently at 0.25% and/or a cut down to negative on deposits rate, this last as a way of stimulating consumption”.
“It’s important to notice the ECB's founding treaty prohibits it from buying government bonds in the primary market”.
“Nevertheless, and considering overnight rates are now at 0.0%, a widely expected cut in it would only have a limited impact on money-market rates in the currency bloc”.
“What may really have a strong impact is if the ECB finally turns on the printing machine to buy assets, something market is not counting on”.
“We will be on a scenario where the US is ending its QE while the EU is barely starting it: the imbalance among both economies will put the common currency under pressure and boost greenback across the board, yet the EUR will likely suffer against all of its rivals."