ECB: Laying the groundwork - Rabobank

Sandeep Kanihama FXStreet Contributor

Rabobank analysts believe that the ECB’s Governing Council will use the July meeting to steer towards a rate cut in September.

Key Quotes

“Policy rates

We expect forward guidance to be updated to signal a rate cut, e.g. “The Governing Council now expects the key ECB interest rates to remain at their present or lower levels [...]”
We think that this would herald a 10bp rate cut in September. Additionally, we see 3 follow-up cuts in the coming 12 months.
Draghi signaled that further rate cuts would be accompanied by some form of mitigating factors. We believe a tiered deposit rate is the most feasible solution.”

“Asset Purchase Program

We don’t expect changes to the reinvestment program or its forward guidance, nor do we anticipate the ECB to restart net asset purchases at this stage.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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