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The mounting pressures on Europe's central banks
Saxo’s Nick Beecroft says that although the ECB “doesn't tend to move quickly”, there is a chance it will make a move this time, due to the low inflation levels.
He says that if they do make changes, he thinks they may go for a 10 basis point reduction in the main refinancing rate to 0.15 percent and taking the deposit rate to slightly negative to -0.1 percent.
At the moment though, most analysts expect the ECB’s main refinancing rate to remain at a record low of 0.25 percent. But Neil Staines, Head of Trading at the ECU Group, wants more, he says: “The pressure now is for the ECB to bring out some kind of action, whether it’s credit related, or whether it’s lowering rates. We’ll have to see but there’s certainly some more work to be done from the ECB.”
Over in the UK, the Bank of England - and in particular Mark Carney - take central stage for the monthly rate announcement. This month the decision comes amid questions about the bank's forward guidance. Speaking about this, Nick says: “Carney is trying to rather quietly consign forward guidance to the rubbish bin and move away from that because unemployment rather embarrassingly has moved to the 7% threshold quickly.”
He adds: “It will be very interesting to see his comments formalised by the Monetary Policy Committee the next time it meets.”
01:53 minutes
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