Analysts at Natixis, explained that growth prospects in the Eurozone, no signs of wage or core inflation, among others, cast doubts over whether the European Central Bank will be able to raise its interest rates from the autumn of 2019.
Key Quotes:
“There is no question that the ECB’s current intention is to start normalising its interest rates after the summer of 2019 and then to continue on the path of a gradual normalisation. This prospect is consistent with the economic forecasts made by the ECB, but does not correspond to financial market expectations.”
“It is easy to draw up a scenario where the ECB cannot raise its interest rates after the summer of 2019. It is easy to draw up a scenario where: Growth is weak in the eurozone, especially if the equity market remains depressed; Core inflation in the euro zone remains low; Oil prices are a problem, whether they are high (very low growth) or low (very low core inflation). Under this scenario, it would indeed be difficult for the ECB to raise its interest rates from September 2019.”
Share
