ECB: First move in the deposit rate pushed back - Wells Fargo

Today the European Central Bank announced the end of the QE program. According to analysts from Wells Fargo, the first rate hike move will take place during Q3 2019.

Key Quotes:

“We take the Governing Council at its word regarding its commitment to keep rates unchanged through the summer of 2019. Consequently, we need to make some tweaks to our forecast for ECB policy rates. We have pushed back our forecast for the first move in the deposit rate from Q2-2019 to Q3-2019.”

“We look for the Governing Council to lift its deposit rate from -0.40 percent to -0.20 late in Q3-2019 while keeping its main refinancing rate and its and its marginal lending facility rate unchanged at 0.00 percent and 0.25 percent, respectively. We then look for it to hike its deposit rate to 0.00 percent, its main refinancing rate to 0.25 percent, and its marginal lending facility rate to 0.50 percent sometime late in Q4-2019."

“There are few inflationary pressures in the euro area at present. Although the overall CPI inflation rate jumped up to 1.9 percent in May, the core rate of inflation remains depressed at roughly 1 percent. If the core rate of inflation remains well below the ECB’s target of “below, but close to, 2 percent over the medium term” then the Governing Council may keep the policy rate unchanged for even longer than we now anticipate.”