31 Jul 2013
Flash: ECB to eye market reactions to Fed - Nomura
FXstreet.com (London) - Analysts at Nomura said, ultimately, whether rates are cut this week could yet depend on the market response to tonight’s Fed policy announcement.
Key Quotes:
“Ultimately, whether rates are cut this week could yet depend on the market response to tonight’s Fed policy announcement.as well as how patient the Council is willing to be regarding the (lack of) effectiveness of forward guidance in delivering lower rates”.
“At this stage we believe that, on balance, the ongoing signs of recovery and absence of any significant increase in market rates relative to early July will be enough to keep the Council on hold in August”.
“However, we expect the ECB will still want to protect itself from any significant back-up in interest rates, which would put President Draghi on course for stressing a dovish tone, verbally reinforcing the forward guidance and the downside bias on rates and threatening action if there is no improvement in market rates (which could put the focus on the 5 September meeting for any possible additional policy measures)”.
Key Quotes:
“Ultimately, whether rates are cut this week could yet depend on the market response to tonight’s Fed policy announcement.as well as how patient the Council is willing to be regarding the (lack of) effectiveness of forward guidance in delivering lower rates”.
“At this stage we believe that, on balance, the ongoing signs of recovery and absence of any significant increase in market rates relative to early July will be enough to keep the Council on hold in August”.
“However, we expect the ECB will still want to protect itself from any significant back-up in interest rates, which would put President Draghi on course for stressing a dovish tone, verbally reinforcing the forward guidance and the downside bias on rates and threatening action if there is no improvement in market rates (which could put the focus on the 5 September meeting for any possible additional policy measures)”.