20 Jan 2014
Flash: ECB’s new conditions for action - BBH
FXstreet.com (Guatemala) - Marc Chandler, Global Head of Currency Strategy at Brown Brothers Harriman.
Key Quotes:
"At his press conference earlier this month, ECB President Draghi provided two general conditions for new action: a worsening of the disinflation outlook and an unwarranted increase in money market rates. There is little to add to the inflation picture over the past couple of weeks, but money market rates are elevated."
"EONIA was above the 25 refi rate in the second half of last week. Indicative prices suggest 3-month interbank lending rates have doubled over the past three months to 27 bp. Pressure will mount on the ECB to act, but politically possible effective options are few and far between. Banks will continue to pay down their LTRO borrowings and, while lending to households appear to be stabilizing, lending to SMEs continues to fall."
Key Quotes:
"At his press conference earlier this month, ECB President Draghi provided two general conditions for new action: a worsening of the disinflation outlook and an unwarranted increase in money market rates. There is little to add to the inflation picture over the past couple of weeks, but money market rates are elevated."
"EONIA was above the 25 refi rate in the second half of last week. Indicative prices suggest 3-month interbank lending rates have doubled over the past three months to 27 bp. Pressure will mount on the ECB to act, but politically possible effective options are few and far between. Banks will continue to pay down their LTRO borrowings and, while lending to households appear to be stabilizing, lending to SMEs continues to fall."