ECB seen cutting rate to 2.00% – BBH

The ECB is widely expected to cut the policy rate 25bps to 2.00% (8:15am New York, 1:15pm London), BBH FX analysts report.

Focus turns to Lagarde and split vote

"President Christine Lagarde’s press conference is 30mins later. The ECB will publish updated macroeconomic projections. At the last April 16-17 policy meeting, the ECB unanimously decided to cut the policy rate by 25bps to 2.25% citing 'the disinflation process is well on track' and 'the outlook for growth has deteriorated owing to rising trade tensions'."

"This time around we doubt the decision to cut the policy rate will be unanimous as a few ECB policymakers (Holzmann, Nagel, Müller, and Schnabel) have recently signaled preference for a pause. A split vote can lead to a modest upward adjustment to ECB rate expectations in favor of EUR. Interest rate futures imply 60bps of ECB easing over next 12 months and the policy rate to bottom between 1.50% and 1.75%."