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3 May 2013
Forex Flash: Three scenarios on the ECB outlook in coming months - RBS
FXstreet.com (Barcelona) - According to RBS economics team, there are three scenarios for the ECB outlook for rates for the next few months: "A balanced cut in rates by September (A); a cut in the main refinancing rate with the deposit rate unchanged and a symmetrical corridor (B); and no change in rates based on an improving outlook (C)" the team notes.
"Of course, we could start finessing scenario A into different variants with smaller deposit rate cuts (5, 10 or 20 basis points) but at this stage that looks like over-egging the pudding. The upshot is that we think another cut in the main refinancing rate is likely by the end of September, but we are not yet sufficiently confident that the Council is ready to take the deposit rate sub-zero to make a deposit rate cut part of that most likely scenario" the team added.
"Of course, we could start finessing scenario A into different variants with smaller deposit rate cuts (5, 10 or 20 basis points) but at this stage that looks like over-egging the pudding. The upshot is that we think another cut in the main refinancing rate is likely by the end of September, but we are not yet sufficiently confident that the Council is ready to take the deposit rate sub-zero to make a deposit rate cut part of that most likely scenario" the team added.