Today the World Bank drastically cuts its forecasts for advanced economies and warned of a stagnant global economy in H2. Meanwhile, ECB members are talking like the rate cutting cycle is nearly over and market pricing has just one more cut in the future.
Earlier, the ECB's Vujcic said they can wait until September to even discuss a further move in an interview with Bloomberg TV.
“We feel that we are now in a very good position,” he said. “It’s worth now waiting to get more data and in my view, to get another projection before we decide where we want to go and hopefully by that time get more clarity on the on the trade relationships.”
Part of the patience is that central bankers want to see what happens with the US trade war as that could be a swing factor. Rate cuts also happen with a lag and the ECB has now cut 8 times. Still, there are some real risks to growth and there are reasons to think inflation will come down further, including from Vujcic.
“The two main reasons why we saw that disinflation are energy prices and the exchange rate,” he said. “It’s very volatile and this is also what we have to have in mind.”
The euro is flat today at 1.1425.
This article was written by Adam Button at www.forexlive.com. Read More Details
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