Looking for a 20bps ECB rate cut – TD Securities

Previewing next week’s critical European Central Bank (ECB) policy meeting, “We’re on the dovish end of expectations, looking for a 20bps rate cut, alongside the introduction of a tiering system, as well as €40bn/month of QE,” said TD Securities analysts.

“We’re more comfortable with our forecast for a more aggressive rate cut, but there’s a lot of uncertainty around the call for QE, given the push-back from some of the more hawkish Governing Council members.”

Commenting on the Central Bank of the Republic of Turkey  (CBRT) monetary policy meeting, “We expect the CBRT to cut the benchmark one-week repo rate by at least 275bps, given the intense political pressure,” analysts argued.

“Given the CBRT’s forecast for a sharp fall in inflation to come, mostly due to base effects, the CBRT likely wants to cut as much as the market will tolerate to keep real rates roughly constant. We will assess the lira’s vol next week to fine tune that size.”