Full ECB Preview: Draghi Parting Gift - A Bazooka Or A Water Pistol? | WHAT REALLY HAPPENED

Full ECB Preview: Draghi Parting Gift - A Bazooka Or A Water Pistol?

Will outgoing ECB president Mario Draghi's "swan song" decision - the one in which he is widely expected to cut rates deeper into negative territory and resume sovereign and/or corporate QE - be a bazooka or a waster pistol? That's the question.

Markets currently fully price in a 10 bps reduction in the deposit rate to -0.5% with just over a 40% chance of a deeper cut of 20 bps.

Of the 70 economists polled by Reuters, around a quarter look for a 20bps reduction with the remainder looking for 10bps. Elsewhere, the survey noted that almost 90% of respondents expected a resumption of bond purchases as of October with a touted monthly amount of EUR 30bln”. In order to mitigate the impact of deeper negative rates on the Eurozone banking sector, around 90% of those surveyed look for some form of tiering system.

Comments

SHARE THIS ARTICLE WITH YOUR SOCIAL MEDIA