Wednesday, May 5, 2010

JPMorgan’s Fuzesi ECB meeting Thurs morning ECB Policy Meeting

ECB meeting Thurs morning –JP Morgan does not expect the ECB to make any new policy announcements at tomorrow's policy meeting. However, the pressure from financial markets has remained intense and the pressure on sovereigns beyond Greece has increased, despite last weekend's announcement of the EU/IMF support package and the ECB's decision to suspend the minimum credit rating requirement on Greek sovereign debt for use in its liquidity operations. Therefore, further ECB policy action cannot be ruled out entirely tomorrow.  The ECB certainly has further policy options. For example, it could reintroduce the provision of unlimited liquidity at longer horizons and it could purchase government bonds outright.  Morgan doubts the ECB is ready to take the latter step just yet.  On growth, the ECB is unlikely to change its view that the pace of recovery will be moderate and possibly uneven. 

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