3 Feb 2014
Flash: ECB to announce further stimulus? - BTMU
FXStreet (Barcelona) - Lee Hardman, FX Analyst at the Bank of Tokyo Mitsubishi UFJ notes investor expectations of further ECB easy policies this week.
Key Quotes
"The euro starts the week on weaker footing heading into this week’s ECB monetary policy meeting. The euro has weakened modestly following the release late last week of the weaker than expected euro-zone CPI report for January."
"The report revealed that the annual rate of headline inflation unexpectedly declined by 0.1 point to 0.7% in January. It matched the recent low point from October which prompted the ECB to lower their refirate by 0.25 point at their next policy meeting in November. The annual rate of core inflation still ticked higher by 0.1 point to 0.8% in January although remains close to the record low."
"Investor expectations that the ECB may announce further monetary easing in the week ahead have also been reinforced by the release of a report from late last week stating that the Bundesbank would support ending the ECB’s absorption of liquidity injected through bond purchases made through the Securities Market Program. The ECB has recently and sometimes unsuccessfully been withdrawing around EUR170 billion of liquidity, which if stopped would help ease tightening liquidity conditions and upward pressure upon euro-zone short rates at least in the near-term."
Key Quotes
"The euro starts the week on weaker footing heading into this week’s ECB monetary policy meeting. The euro has weakened modestly following the release late last week of the weaker than expected euro-zone CPI report for January."
"The report revealed that the annual rate of headline inflation unexpectedly declined by 0.1 point to 0.7% in January. It matched the recent low point from October which prompted the ECB to lower their refirate by 0.25 point at their next policy meeting in November. The annual rate of core inflation still ticked higher by 0.1 point to 0.8% in January although remains close to the record low."
"Investor expectations that the ECB may announce further monetary easing in the week ahead have also been reinforced by the release of a report from late last week stating that the Bundesbank would support ending the ECB’s absorption of liquidity injected through bond purchases made through the Securities Market Program. The ECB has recently and sometimes unsuccessfully been withdrawing around EUR170 billion of liquidity, which if stopped would help ease tightening liquidity conditions and upward pressure upon euro-zone short rates at least in the near-term."