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18 Sep 2015
What the Fed has signalled to ECB – Deutsche Bank
FXStreet (Delhi) – Research Team at Deutsche Bank, suggest that assuming this is a short delay of Fed tightening; the ramifications for our views on the euro area and ECB policy are not significant. Peter Hooper now sees Fed liftoff in December. That said, the overall tone from the Fed was more dovish than expected.
Key Quotes
“The market had backed away from a September Fed hike. Global uncertainties and associated tighter financial conditions were the key reasons for the Fed stalling. These were the same reasons the ECB adopted a more dovish tone at its press conference on 3 September.”
“The recent China uncertainties raised the probability of a general increase in ECB QE, but the risk remains below 50% in our opinion. It is a live situation and the ECB will be monitoring: China’s impact on the euro area economy, whether tighter market-based financial conditions — including the euro exchange rate which is at risk of being moved around by changing perceptions of the Fed policy stance — are counterbalanced by easier bank-based financial conditions, and the evolution of euro area inflation and inflation expectations.”
Key Quotes
“The market had backed away from a September Fed hike. Global uncertainties and associated tighter financial conditions were the key reasons for the Fed stalling. These were the same reasons the ECB adopted a more dovish tone at its press conference on 3 September.”
“The recent China uncertainties raised the probability of a general increase in ECB QE, but the risk remains below 50% in our opinion. It is a live situation and the ECB will be monitoring: China’s impact on the euro area economy, whether tighter market-based financial conditions — including the euro exchange rate which is at risk of being moved around by changing perceptions of the Fed policy stance — are counterbalanced by easier bank-based financial conditions, and the evolution of euro area inflation and inflation expectations.”