27 Jun 2014
No further incursions into uncharted territory just yet - Rabobank
FXStreet (Guatemala) - Analysts at Rabobank explained that since Mario Draghi announced a slew of monetary easing measures in early June, interest rates have fallen sharply across a broad spectrum of maturities and instruments.
Key Quotes:
“We argue that ECB has been increasingly successful in getting its message across (although on the currency front the ECB may still have something to wish for)”.
“We also look at recent money market developments in the light of the upcoming first two TLTROs scheduled for September and December”.
“With regard to the Governing Council meeting on Thursday we do not expect any significant announcements. The ECB will obviously maintain a dovish stance to fend off renewed pressure on the currency”.
“Expect the ECB President to stress that rates will stay low for an extended period of time (it cannot be stressed enough that this has a great ‘bang for the buck’ ratio as long as the economic recovery remains feeble and inflation stays low)”.
“On the other hand, Mr. Draghi may be keen to avoid alienating the more hawkish members in the Council, among which Bundesbank president Jens Weidmann. From a broader eurozone perspective this is not the time to complain about (too) low rates and risks of bubbles in certain markets”.
“However, one only has to look across the Channel to realise that perceptions can change rapidly once accommodative monetary policy and economic recovery become synchronized”.
Key Quotes:
“We argue that ECB has been increasingly successful in getting its message across (although on the currency front the ECB may still have something to wish for)”.
“We also look at recent money market developments in the light of the upcoming first two TLTROs scheduled for September and December”.
“With regard to the Governing Council meeting on Thursday we do not expect any significant announcements. The ECB will obviously maintain a dovish stance to fend off renewed pressure on the currency”.
“Expect the ECB President to stress that rates will stay low for an extended period of time (it cannot be stressed enough that this has a great ‘bang for the buck’ ratio as long as the economic recovery remains feeble and inflation stays low)”.
“On the other hand, Mr. Draghi may be keen to avoid alienating the more hawkish members in the Council, among which Bundesbank president Jens Weidmann. From a broader eurozone perspective this is not the time to complain about (too) low rates and risks of bubbles in certain markets”.
“However, one only has to look across the Channel to realise that perceptions can change rapidly once accommodative monetary policy and economic recovery become synchronized”.