8 May 2014
ECB to strike a more dovish tone - RBS
FXStreet (Bali) - RBS Economists expect the ECB to leave its key rates on hold in May, although they expect the ECB to adopt a more dovish bias at Draghi's press conference.
Key Quotes
"The inflation figures released last week have increased the likelihood that the ECB will revise down its baseline inflation forecasts at the June meeting, but that does not preclude action at the May meeting. However, we expect the ECB to leave its key rates on hold in May."
"The language of the post meeting statement and the tone of the press conference should, however, convey a more dovish policy bias. In particular, it will be notable to see if the ECB drops the phrase “firmly anchored” when discussing inflation expectations."
"We continue to believe that actions will speak louder than words for the EUR, and a test of 1.40 looks likely if the ECB opts not to ease or give an overt signal that easing is imminent in the near future."
"If we are wrong and policy is eased further, we would expect this to be limited to a further reduction in the refi and deposit rate."
Key Quotes
"The inflation figures released last week have increased the likelihood that the ECB will revise down its baseline inflation forecasts at the June meeting, but that does not preclude action at the May meeting. However, we expect the ECB to leave its key rates on hold in May."
"The language of the post meeting statement and the tone of the press conference should, however, convey a more dovish policy bias. In particular, it will be notable to see if the ECB drops the phrase “firmly anchored” when discussing inflation expectations."
"We continue to believe that actions will speak louder than words for the EUR, and a test of 1.40 looks likely if the ECB opts not to ease or give an overt signal that easing is imminent in the near future."
"If we are wrong and policy is eased further, we would expect this to be limited to a further reduction in the refi and deposit rate."