HALISTER1: ABN Amro Expects ECB to Go Deeper on Depo Rate; Fed on Hold

ABN Amro Expects ECB to Go Deeper on Depo Rate; Fed on Hold

(Bloomberg) -- No longer expect Fed to hike in 2016, while ECB and BOJ will probably venture even deeper into negative rates, ABN Amro economist Nick Kounis writes in client note.
  • Previously expected Fed to raise interest rates again in June and 3 times in total this year
  • Change in view due to downgraded global economic growth forecast, more pessimistic global economic outlook
  • Expect ECB to step up its monetary stimulus more significantly by cutting deposit rate by 40bps to -0.7% over coming months vs 20bps cut previously
  • Reductions likely to take place in two steps of 20bps, in March and June
  • Still see ECB stepping up of QE by EU10b per month
  • See now bond yields to stay lower for longer and less dollar strength
  • See EUR/USD at 1.05 vs prev. 1.00 at year end
  • NOTE: RBS, JPMorgan expect deeper ECB deposit rate cut this year
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Nick Kounis (ABN AMRO Group NV)

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