KBC Flash

Another difficult balancing act for the ECB

Thu, Feb 7 2008, 08:36 GMT
by KBC Market Research Desk

KBC Bank


  • • ECB still pressured between rising inflation and weaker growth, but...
  • • …Inflation peak in February and weak Q4 GDP growth data may increase room for manoeuvre from March meeting onwards
  • • We still see two rate cuts by 25 bps in March and June
At the February policy meeting, the ECB governing council is widely expected to leave rates unchanged at 4% for the 8th consecutive month. Market expectations towards an easing in policy have increased dramatically since the previous meeting however and now discount almost three rate cuts for 2008. The main question for this meeting is whether the ECB will soften its hawkish language and eventually drop its tightening bias.

Published on  Thu, Feb 7 2008, 08:43 GMT

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This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

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