FXStreet (Bali) - RBS FX Strategists share their views on the latest MNI headlines, quoting unnamed ECB sources, which suggests the Central Bank may not have reached lower bound on rates.
"MNI reported that the ECB does not necessarily see itself at the lower bound in interest rates, citing an unnamed ECB source. The story comes at odds with President Draghi himself, who said at his June press conference that “for all the practical purposes, we have reached the lower bound, while further interest rate cuts are unlikely near term, the message from the ECB generally has been that the toolkit is not empty, even though most feel that QE is the one remaining tool left in the bag at this point."
"This article at least opens up the concern that its toolkit is larger and may keep the potential for EUR downside on the back of a further widening of the interest rate gap."
"With the ECB potentially not at the lower bound, tomorrow’s inflation prints in Germany and Spain may take on increased importance as weakness in inflation should increase easing expectations, perhaps from both a balance sheet side (QE) but also from the interest rates side."