EUR: Disappointment galore after unwrapping of ECB gifts – ING

By FXStreet FXStreet (Delhi) – Carsten Brzeski, Chief Economist at ING, notes that a small cut of the deposit rate and an extension of QE at least until March 2017 is the outcome of latest ECB meeting and the markets reacted disappointed.

Key Quotes

“Santa Mario did not turn into the Grinch, the Christmas monster. However, his long awaited
early Christmas afternoon left many market participants disappointed like small kids who receive less and smaller presents than expected on Christmas Eve.

“For the first time in a long while, ECB President Draghi underachieved and delivered less than the market consensus had expected. As a result, the euro appreciated and bond yields increased immediately after the policy decision. So what exactly did the ECB decide? Basically five things: i) a 10bp cut in the deposit rate; ii) an extension of the formal deadline of monthly QE purchases to at least March 2017, from an earlier September 2016; iii) reinvestments of the principal payments of the securities purchased “for as long as necessary”; iv) the inclusion of regional and local government bonds in the monthly purchases; and v) an extension of fixed-rate tender procedure and full allotment for refinancing operation until the end of 2017.”

“What the ECB …read more

Source:: FX Street