According to analysts at Nordea Markets, ECB is finding itself considering new stimulus measures again and suggest that the new liquidity operations will be in store, but Euro-area excess liquidity has most likely peaked already.
Key Quotes
“New liquidity operations will be in store, but not yet in March.”
“We see three scenarios for the ECB, depending on what they want to achieve with new liquidity operations.”
“In our baseline, the ECB will try to prevent a relatively rapid fall in excess liquidity and offer new 4-year TLTROs.”
“If the ECB also wants to provide additional monetary policy easing, it needs to find very attractive liquidity operations, possibly with an even longer maturity than four years.”
“In all the scenarios, excess liquidity will fall, but that does not automatically mean that monetary policy would tighten rapidly.”
“TLTROs will probably not be a game-changer for the EUR, but will have curve and spread implications.”
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