ECB to act today - Rabobank
According to analysts at Rabobank, today’s main event is the ECB policy decision and the Eurozone PMIs have certainly increased the risk that the ECB acts today already.
Key Quotes
“Although the manufacturing PMI indicated that the outlook for this sector continues to weaken, the still okay reading for the services sector should give the Governing Council a little respite.”
“Despite another day of record-high temperatures across Europe, we therefore believe that the Council will be able to keep their cool at today’s meeting: we do not see sufficient reasons for the ECB to accelerate new easing measures and instead we are still looking for a series of rate cuts starting in September.”
“That leaves today’s meeting to lay the groundwork for these cuts. While the market is already fully pricing in a rate cut by September, the forward guidance still states that key interest rates will stay at present levels until at least mid-2020.”
“The ECB can give a nod to the market by changing their forward guidance to include the possibility of lower rates again. Such a change should cement market expectations of easing measures being implemented by September.”
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