Implications Of The ECB’s Easing

Published 06/06/2014, 03:03 AM
Updated 05/14/2017, 06:45 AM

The ECB surprised the markets by boosting liquidity through a new 4Y targeted LTRO (TLTRO) while at the same time cutting the refi and deposit rates, bringing the latter into negative territory.

We take a closer look at the implications of these measures. While it is difficult to judge how much the TLTROs will indeed boost liquidity we believe it will be by a significant amount.

The combination of negative rates and rich liquidity will support performance in peripheral markets, lead to lower money market fixings, steeper yield curves, higher break-even inflation and lower EUR/USD cross currency basis.

The forward looking message from the ECB meeting was that the announced measures will take some time before the macro economic implications are seen. Hence, the markets should not expect much more for now, although the ECB is there, if needed.

To Read the Entire Report Please Click on the pdf File Below

Latest comments

Loading next article…
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2025 - Fusion Media Limited. All Rights Reserved.