ECB’s Knot sees little obstacle to another rate cut next week

• Data is encouraging, confirms that we’ll return to target
• Hopes to see recovery in economy, then we’ll take it from there
• There is new downside risk from trade policy on growth, impact on inflation not so clear
• But pretty comfortable with market expectations for the next two meetings
• But if recovery continues, not too convinced that we need to into “stimulative mode”

For Knot to reaffirm rate cut expectations for January and March, it says a lot about how the ECB is positioned right now. All of this lines up with market pricing as well of course with ~46 bps of rate cuts priced in for both January and March currently.

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