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23 Nov 2015
ECB's menu of options for additional easing – Deutsche Bank
FXStreet (Delhi) – Research Team at Deutsche Bank, lists down the various options available in ECB’s platter for further easing.
Key Quotes
“Rate cuts and an expansion of the Asset Purchase Programme (APP) are the ECB’s primary avenues of easing.”
“The minutes of the ECB’s October meeting and Peter Praet’s interview have shifted the policy mix marginally in favour of an expansion of the APP.”
“The market is now pricing more than 10bp of rate cuts for the December meeting but less than 20bp of cumulative rate cuts. We expect the ECB to deliver enough to at the very least sustain this pricing. However, the ECB maybe more constrained than central banks of smaller and more open European economies in taking rates into deep negative territory.”
“An increase in the pace of purchases would be more aggressive easing. Even if it is not delivered at the December meeting, measures taken to increase the eligible universe including the already implemented increase in issue limit to 33%, potential inclusion of regional government debt and other asset classes and the potential removal of yield-floor on purchases would be seen as a strong indication of such a decision in 2016.”
Key Quotes
“Rate cuts and an expansion of the Asset Purchase Programme (APP) are the ECB’s primary avenues of easing.”
“The minutes of the ECB’s October meeting and Peter Praet’s interview have shifted the policy mix marginally in favour of an expansion of the APP.”
“The market is now pricing more than 10bp of rate cuts for the December meeting but less than 20bp of cumulative rate cuts. We expect the ECB to deliver enough to at the very least sustain this pricing. However, the ECB maybe more constrained than central banks of smaller and more open European economies in taking rates into deep negative territory.”
“An increase in the pace of purchases would be more aggressive easing. Even if it is not delivered at the December meeting, measures taken to increase the eligible universe including the already implemented increase in issue limit to 33%, potential inclusion of regional government debt and other asset classes and the potential removal of yield-floor on purchases would be seen as a strong indication of such a decision in 2016.”