ECB’s Stournaras vouches for a 25 bps rate cut in December

• Trade tariffs likely to provoke a response
• And a 25 bps rate cut in December is the right response
• We should cut every meeting until rates reach 2%
• The neutral rate on average is about 2%
• It’s too soon to say if ECB needs to go below neutral

He’s definitely more dovish than Villeroy, who commented earlier here. In any case, traders have already fully priced in a 25 bps rate cut for a while now. The question before this was whether or not we’ll see the ECB move by 50 bps but those odds look to be getting slimmer day by day.

This article was written by Justin Low at www.forexlive.com.