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4 Dec 2014
ECB to signal more strongly that it is considering further easing - BTMU
FXStreet (Barcelona) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ, notes the ECB will send a stronger signal that it is considering implementing further easing measures including sovereign debt QE which should dampen the scope for a relief euro rebound in the near-term if no ECB easing is delivered today.
Key Quotes
“The euro is under renewed downward pressure heading into today’s ECB monetary policy meeting with EUR/USD falling towards the 1.2300-level. The sharp ongoing fall in commodity prices, uncomfortably low inflation and inflation expectations, and loss of economic growth momentum are all keeping pressure on the ECB to deliver further monetary easing weighing on the euro.”
“We continue to believe that it may prove too early to expect further easing as soon as at today’s meeting. The ECB may still want to wait to assess the impact of current easing measures, although there is a non-negligible risk that it may still decide that the case is already compelling enough to deliver further easing today.”
“The release of the ECB’s latest staff forecasts adds additional uncertainty to today’s policy decision. Updated projections from other professional and official forecasters highlight that the ECB staff may lower both their economic growth and inflation forecasts.”
“The sharp drop in commodity prices and more optimistic expected impact of the ECB’s latest easing measures will provide an offsetting boost to the economic growth outlook. It is not clear cut that the medium-term inflation outlook will be lowered enough to trigger further easing at today’s policy meeting.”
“However, it is likely that the ECB will send a stronger signal that it is considering implementing further easing measures including sovereign debt QE which should dampen the scope for a relief euro rebound in the near-term if no ECB easing is delivered today.”
Key Quotes
“The euro is under renewed downward pressure heading into today’s ECB monetary policy meeting with EUR/USD falling towards the 1.2300-level. The sharp ongoing fall in commodity prices, uncomfortably low inflation and inflation expectations, and loss of economic growth momentum are all keeping pressure on the ECB to deliver further monetary easing weighing on the euro.”
“We continue to believe that it may prove too early to expect further easing as soon as at today’s meeting. The ECB may still want to wait to assess the impact of current easing measures, although there is a non-negligible risk that it may still decide that the case is already compelling enough to deliver further easing today.”
“The release of the ECB’s latest staff forecasts adds additional uncertainty to today’s policy decision. Updated projections from other professional and official forecasters highlight that the ECB staff may lower both their economic growth and inflation forecasts.”
“The sharp drop in commodity prices and more optimistic expected impact of the ECB’s latest easing measures will provide an offsetting boost to the economic growth outlook. It is not clear cut that the medium-term inflation outlook will be lowered enough to trigger further easing at today’s policy meeting.”
“However, it is likely that the ECB will send a stronger signal that it is considering implementing further easing measures including sovereign debt QE which should dampen the scope for a relief euro rebound in the near-term if no ECB easing is delivered today.”