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1 Nov 2013
Flash: EUR; calling for interest rate cuts - BBH
FXstreet.com (London) - Research teams at BBH said the ECB will not meet until next Thursday, but weak data has sparked calls for interest rate cuts.
“In particular, extremely low inflation readings have captured the market’s imagination. We expect the ECB press conference to be dovish but we see no cut (yet)”.
“For us, the key is not the refi rate of 0.5%, since it is not acting like a floor for rates”.
“What is important is the deposit rate, which we doubt will be cut below zero. We also doubt a LTRO would be taken up by banks if they will be penalized for it in stress tests”.
“In particular, extremely low inflation readings have captured the market’s imagination. We expect the ECB press conference to be dovish but we see no cut (yet)”.
“For us, the key is not the refi rate of 0.5%, since it is not acting like a floor for rates”.
“What is important is the deposit rate, which we doubt will be cut below zero. We also doubt a LTRO would be taken up by banks if they will be penalized for it in stress tests”.