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EUR: Additional ECB easing on 10 March – Goldman Sachs

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 8, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Research Team at Goldman Sachs, suggests that as a consequence of the renewed weakness of inflation and its potential impact on long-term inflation expectations, we expect the ECB to announce a number of additional easing measures at its 10 March meeting.

    Key Quotes

    “We are less confident in predicting the precise form that further monetary easing will take. However, as the date of the meeting has approached (and as global economic and financial market sentiment has deteriorated) the rhetoric of ECB Council members has turned increasingly dovish. In response, we have adjusted our ECB forecast and have increased the number and degree of measures that we think likely.

    In our central case, we now expect the ECB to announce the following actions: (1) a 10bp cut in the deposit rate, from -0.3% to -0.4%; (2) the introduction of a tiered deposit system, opening the possibility of further deposit rate cuts in the future; (3) a €10bn increase in the pace of monthly purchases under the Asset Purchase Programme (APP), from €60bn to €70bn per month; and (4) a six-month extension in the duration of the APP, from March 2017 to September 2017.”
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