18 Dec 2014
ECB moving closer to sovereign debt QE in January - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes that expectations were reinforced yesterday for an ECB easing in January after comments from ECB’s board member Coeure.
Key Quotes
"The euro has also come back under downward pressure as investor expectations continue to build that the ECB will ease monetary policy more aggressively at their next meeting on the 22nd January 2015. The ongoing drop in long-term inflation expectations in the euro-zone is strengthening the case for aggressive easing early next year."
"The ECB’s preferred long-term market-based measure of inflation expectations, the 5-year 5-year forward swaps rate, is falling further below the ECB’s inflation target to just above 1.6%.”
“Investor expectations for more ECB easing were reinforced yesterday by comments from ECB Executive Board member Coeure who stated that “I see broad consensus around the table in the Governing Council that we need to do more”. He also added that “if we want to do more we obviously have to reach out to market segments where there is more liquidity and that is why the government bond market is the baseline option, which doesn’t necessarily mean we would only buy government bonds”."
Key Quotes
"The euro has also come back under downward pressure as investor expectations continue to build that the ECB will ease monetary policy more aggressively at their next meeting on the 22nd January 2015. The ongoing drop in long-term inflation expectations in the euro-zone is strengthening the case for aggressive easing early next year."
"The ECB’s preferred long-term market-based measure of inflation expectations, the 5-year 5-year forward swaps rate, is falling further below the ECB’s inflation target to just above 1.6%.”
“Investor expectations for more ECB easing were reinforced yesterday by comments from ECB Executive Board member Coeure who stated that “I see broad consensus around the table in the Governing Council that we need to do more”. He also added that “if we want to do more we obviously have to reach out to market segments where there is more liquidity and that is why the government bond market is the baseline option, which doesn’t necessarily mean we would only buy government bonds”."