Nordea Bank analysts suggest that the Eurozone’s recent manufacturing PMI data points were awful and clearly put risks to the downside even for ECB’s downward-revised growth forecasts for this year.
Key Quotes
“The primary means for ECB to tackle a weaker outlook are making the terms of TLTROs more attractive and adjusting its forward guidance even further (e.g. until end of March 2020 or even til summer 2020).”
“Both steps are possible at June meeting, but we do not think ECB will go into any panic mode at this point. We postponed our call for 1st ECB hike to June 2020 and see downside/postponement risks even to this scenario.”
“The call is reliant on our expectation that Euroarea growth will see a rebound in 2nd half of the year. If such a rebound does not materialize or will be delayed, ECB may not raise rates in 2020 either.”
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