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ECB Preview: It’s about resistance and inflation - Rabobank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 21, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Elwin de Groot, Senior Eurozone Strategist at Rabobank, suggests that as the ink of the previous easing package has barely dried, we expect no ECB action today.

    Key Quotes

    “The hurdle to future measures is significant, but a sharp cut in the March projections for inflation will be difficult to ignore.”

    “A 10bp deposit rate cut in March may therefore prove the path of the least resistance.”

    “In March the ECB publishes new staff projections for growth and inflation. They will have to cut their 2016 and 2017 inflation projections by a substantial amount (we would argue by almost 1% for 2016 alone. We believe that this sharp adjustment and the possibility that their inflation forecast for 2018 may not even reach their medium term target of “lower but close to 2%” will be extremely hard to ignore entirely. Which implies that they probably need to offset this with some ‘good news’.”
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