ECB will announce a cut in the deposit rate – Rabobank

By FXStreet Emile Cardon, Research Analyst at Rabobank, notes that the uncertainty regarding the ECB’s decisions on Thursday has emerged.

Key Quotes

“We think it is now beyond any reasonable doubt that the ECB will announce a cut in the deposit rate on Thursday. Our forecast is for a 10bp cut to -40bp (to be followed by another 10bp cut in the June meeting). Other measures could be via a change in the current QE-programme, via additional monthly purchases and/or some relaxation in the conditions.

Although we do believe that a larger cut or a drastic change in the QE-package is possible, we have to bear in mind that this week’s policy easing package is unlikely to be the last one and that the ECB will need to keep some measures on the back burner. This is especially so considering that the effect of all these policy measures is limited at best. In fact, we have argued that they are counterproductive insofar as that they fuel currency wars and distort the allocation of capital, undermining the economy’s long-term growth potential.”
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Source:: FX Street