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ECB Takes Center-Stage on Thursday: Themes for Week of June 1, 2014

ECB Takes Center-Stage on Thursday: Themes for Week of June 1, 2014

6 Years ago | June 01, 2014 00:00:00

Rate Cuts Expected

Financial markets have gotten some of their clearest forward guidance about an impending policy easing over the past few weeks since the days of J-C Trichet. The surprise would be if the central bank does not ease monetary policy. We are certain they will ease policy this Thursday. The Street expects the ECB's main lending rate will be lowered from 0.25%, probably to 0.15% or 0.10%. The central bank is expected to maintain its rate corridor and cut the deposit rate paid to banks on overnight deposits, currently 0%. This implies that the deposit rate will be lowered to either -0.10% or -0.15%. This means that banks would be forced to PAY to park excess funds at the central bank.

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