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4 Feb 2013
Forex Flash: Upcoming ECB meeting holds key importance – BBH
Brown Brothers Harriman analysts believe the upcoming ECB meeting will hold a significant importance.
They note that there has been passive tightening of monetary conditions in the Euro area and there are a few calls for the ECB to cut rates, but “we do not think it will.” They see the first line of defence will be morale suasion. They write, “The reduction in the ECB's balance sheet, which is now the smallest in about a year, is a symptom not of undesirable developments, but of the improved access to private sector funding. Draghi is likely to calm market anxiety.”
They note that there has been passive tightening of monetary conditions in the Euro area and there are a few calls for the ECB to cut rates, but “we do not think it will.” They see the first line of defence will be morale suasion. They write, “The reduction in the ECB's balance sheet, which is now the smallest in about a year, is a symptom not of undesirable developments, but of the improved access to private sector funding. Draghi is likely to calm market anxiety.”