Currency Analyst since 2010

ECB has no reasons to cut rates

Analysts think that the ECB is preparing something. In their view, the next policy move will be not a change in the benchmark rate, but rather a non-standard step.

According to Bloomberg News surveys, the majority of experts think that President Mario Draghi will unveil new liquidity measures such as longer-term refinancing operations (LTRO), while the interest rates will remain at 0.5% through the first half of 2015.

ING: “As long as soft indicators improve and hard data follows suit, there is no reason for the ECB to cut rates. A new LTRO could kill several birds with one stone: it could solve possible liquidity problems, could lower money-market rates and, above all, would help lock in market expectations.”

Comments from the ECB show that the central bank’s assessing the option, but is in no hurry to act. The next ECB meeting will take place on Nov. 7.

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