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Oct 27 - 10:55 AM

EUR: ECB To Push Back Against Market Pricing; Slightly EUR Negative - BofA

By eFXdata  —  Oct 27 - 10:00 AM

Bank of America Global Research discusses its expectations for tomorrow's ECB policy decision.

"We expect the ECB to push back against market pricing of early rate hikes, as it is incompatible with forward guidance, in spite of inflation upside risks. Current pricing for rates implies a summer end for APP and 2022 net issuance in excess of 100bn. More forceful communication is needed, in our view, and a more neutral risk assessment to energy price risks, including prominent downside. We don't expect much signal for December's asset purchase decision after the PEPP ends in March. EGB spreads remain vulnerable to QE uncertainty until at least December," BofA notes. 

"Slightly negative for the EUR if the ECB pushes forcefully against early market pricing, but FX will most likely wait for the important decisions on QE in the December meeting," BofA adds. 

BofA Global Research


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