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ECB will ease by measuring effectiveness of incoming data - RBS

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Nov 3, 2015.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
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    FXStreet (Delhi) – Research Team at RBS, suggest that the ECB will ease according to the effectiveness of the differing instruments.

    Key Quotes

    “European fixed income markets sold off across the board, which was in part attributed to the weekend Il Sole 24 interview of President Draghi, where he stated it was “too early” to make the judgement about cutting the deposit rate at the same time as QE amendments.”

    “Nonetheless, looking in closer detail, President Draghi continued to emphasise the downside risks to both growth and inflation in the period ahead, adding that “if we are convinced that our medium-term inflation target is at risk, we will take the necessary actions.” Moreover, he referenced in particular the various ECB Committees analysing the potential instruments for accommodative policy, adding that “we will decide on this basis” on the type of easing if necessary.”

    “We would view a scenario where the findings of the aforementioned Committees are used to justify an aggressive set of December actions (i.e. upscaling and extension of QE and simultaneously cutting the deposit rate) as highly plausible.”

    “Ultimately, we do not change our expectations of the coming meeting, namely that at the point of delivery, Mr Draghi will surprise markets to the upside by delivering a 10bp deposit rate cut alongside the extension (to at least March 2017) and expansion (to €90bn/month) of the asset purchase programme.”
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