###POV: Is the Eonia curve under-pricing......>

EONIA: ###POV: Is the Eonia curve under-pricing the possibility of rates rising

at the ECB? There is still just over 4-weeks to go until the next ECB GC meeting

in Oct and attention is on what type of tapering they will announce.

- Will it be a fixed schedule with a specified end date as favoured by Vitas

Vasiliauskas or a more opened-dated approach dependent on incoming data?

- Market is currently pricing a 69% chance of a 10bp deposit rate hike in Dec

2018 and a full hike is not priced in until March 2019, according to MNI PINCH

calculations. 

- However if the ECB decide to opt for a fixed schedule and an end date within

6-months, and the economy continues to show solid growth and unemployment

continues to fall (current data supports this view), then markets could start to

price in earlier rate hikes than currently suggested by markets.

- ECB President Mario Draghi even said last night that they are "more confident"

inflation will get back to target, although stressed a "very substantial degree

of monetary accommodation is still needed". But could that accommodation be

provided by its refinancing operations rather than QE and negative rates?