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December 4, 2015 - Crédit Agricole S.A.
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  • December 4, 2015

    ECB: Hey! What did you expect?

    The ECB cut the deposit rate by 10bp, to  0.3%. It extended QE to March 2017 or beyond, if necessary. Those measures strongly disappointed the markets, which expected more QE or more of a cut. In our view this is the good amount of stimulus that is needed by the Eurozone: soft but prolonged accommodation.

  • Download publication - (PDF - 370.44 Ko)

  • Contents:

    - Rate cut: removing upward pressure on the EUR without triggering a currency war. A bad thing for the TLTRO
    - QE modalities: few changes, but not a game changer
    - Small forecast revisions: downwards for inflation, upwards for growth
    - Not the dovish tone we expected

  • Extract:

    The ECB did not cut the refi rate, widening the corridor between the refi and deposit rates by 10bp. This may reduce demand for the three remaining TLTRO's and incite banks to reimburse part of their liquidity as soon as possible, that is to say in September 2016.
    Mario Draghi did not point explicitly to further accommodation in the next few months, adding some hawkishness to the smaller than expected stimulus.

  • Associative topics : Economics | Europe

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