What People Expect From The ECB Today

Mario Draghi

Photo: AP

The ECB makes its latest interest rate decision at 7:45 AM ET.Via Nomura, here’s what people expect…

ECB decision (EZ): This is quite complicated to call. Nomura expects the ECB to cut the policy rate by 50bp, and cut the deposit rate by 25bp taking it to 0%. The Bloomberg consensus is for a 25bp cut. 10 of the 63 respondents are expecting no cut, 5 expecting a 50bp cut and the balance expecting 25bp. The deposit rate expectations are less clear. The market prices in about 10bp of cuts. Interestingly this may not imply a 40% probability of a 25bp cut because some are specifically calling for a less than 25bp cut in the deposit rate to, say, 10bp or 15bp. Other than this the market is looking for indications that the ECB can do more easing if needed as well as perhaps assessing whether the ECB itself wants to be the euro-area bank regulator.

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