FXStreet (Córdoba) – According to analysts from Danske Bank, the European Central Bank will cut an additional 10bp the deposit rate at the March meeting.
Key Quotes:
“We expect the ECB to cut the deposit rate by an additional 10bp at the meeting in March while continuing with today’s reintroduction of its forward guidance that key policy rates will “remain at present or lower levels for an extended period of time”.
“We expect, the ECB in March will prefer to cut the deposit rate further compared to extending the QE programme. Draghi’s only comment about instruments left in the toolbox was that there are plenty of instruments, but the minutes from the December meeting suggested further rate cuts might be the preferred tool if the ECB eases again and the reintroduction of the forward guidance also suggests the ECB is ready to cut rates.”
“Over the next 6 months we look for a continued dovish ECB as headline inflation will head lower due to the base effects from the oil price decline. Hence, we expect for an additional extension of the QE programme on a 6-12m horizon.”
“The meeting today showed, the very low oil price and the risk of second-round effects are much more important to the ECB compared to the outlook for a tightening labour market, which eventually should put upward pressure on wages.”
(Market News Provided by FXstreet)