Possibilities for the ECB Monetary Policy
Almost a few hours to the very expected and long awaited ECB Monetary policy event. Here are a few possibilities that you should be aware of:
1. The ECB could cut the refinance rate, which is already priced in. If this happens, we could see a little rise in the EURO short term, as there will be a lot of profit taking.
2. If they cut the deposit rate, there could be a little euro weakness but not major movement.
3. If the ECB decides to introduce Asset purchases, that is Quantitative Easing, then the Euro will probably drop like a rock. This though is highly unlikely.
4. If a Long-term refinancing option is introduced, there could be a little euro weakness as well. This though will cause the banks to gain liquidity enough to prevent interbank lending and other loan origination from seizing up like it did back in 2008.
5. Not taking any action, which is very unlikely will result in the euro reaching for highs again.
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