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1 Apr 2014
Further ECB easing not ruled out - Investec
FXStreet (Barcelona) - Jonathan Pryor, Corporate Treasury Analyst at Investec, believes the ECB may deliver in light of the recent softer CPI reading in the euro area.
Key Quotes
"The release yesterday of the weaker than expected euro-zone CPI report for March has had very little impact upon the euro with EUR/USD continuing to trade just below the 1.3800-level. The report revealed that the annual rate of headline inflation declined to a new recent low of 0.5% in March moving further below the ECB’s target."
"It is now an even closer call as to whether the ECB will ease monetary policy further at this week’s meeting. The lack of euro negative reaction highlights that the market remains sceptical over the ECB’s desire to effectively ease policy to combat low inflation. Without implementing a negative deposit rate or QE, it is likely that the euro will remain strong for now especially if inflation expectations begin to fall lifting real yields."
Key Quotes
"The release yesterday of the weaker than expected euro-zone CPI report for March has had very little impact upon the euro with EUR/USD continuing to trade just below the 1.3800-level. The report revealed that the annual rate of headline inflation declined to a new recent low of 0.5% in March moving further below the ECB’s target."
"It is now an even closer call as to whether the ECB will ease monetary policy further at this week’s meeting. The lack of euro negative reaction highlights that the market remains sceptical over the ECB’s desire to effectively ease policy to combat low inflation. Without implementing a negative deposit rate or QE, it is likely that the euro will remain strong for now especially if inflation expectations begin to fall lifting real yields."