Lagarde
Barclays is out with a note forecasting the ECB to cut by 25 basis points on October 17. They’re behind the curve on that one as the market shifted dramatically in the past two weeks and is now pricing in a 94% chance of a cut. That’s despite what prior ECB hints had been.
Barclays sees steady 25 bps cuts every meeting until the main refi rate gets to 2% from 3.75% currently. That’s also priced in by the market by next June (with risks towards it being slightly sooner).
Another old hand (and ForexLive fan) also chimed in today to argue for cuts. Vitor Constancio — who was Draghi’s top deputy at the ECB – also sees an October cut.
Inflation in France fell to 1.2 per cent from 1.8 per cent in August. In Spain, the rate fell to 1.5 per cent from 2.3 per cent in August. These numbers point to a September EA inflation just below 2. Given the weak PMI for the EA, the ECB should cut again in October