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STIR: Guidance and Projections In Focus At ECB Decision

STIR
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The ECB decision is due at 1315BST/1415CET. A 25bp ECB cut is unanimously expected and fully priced in ECB-dated OIS. Focus for markets will be on the policy guidance and updated macroeconomic projections.

  • Our baseline scenario looks for President Lagarde to indicate a willingness to cut policy rates further but refuse to be drawn into speculating on the October meeting.
  • Instead, Lagarde is set to reaffirm the bank’s data-dependent and meeting-by-meeting approach.
  • OIS price 34bps of easing through October, and 62bps through year-end.
  • A reminder that the ECB will also narrow the corridor between its three key interest rates at today’s meeting, following the bank's Framework Review in March.
  • Our ECB preview is here.
Meeting DateESTR ECB-Dated OIS (%)Difference Vs. Current Effective ESTR Rate (bp)
Sep-243.416-24.9
Oct-243.330-33.5
Dec-243.047-61.7
Jan-252.817-84.7
Mar-252.506-115.8
Apr-252.286-137.8
Jun-252.075-159.0
Jul-251.985-167.9
Source: MNI/Bloomberg.
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The ECB decision is due at 1315BST/1415CET. A 25bp ECB cut is unanimously expected and fully priced in ECB-dated OIS. Focus for markets will be on the policy guidance and updated macroeconomic projections.

  • Our baseline scenario looks for President Lagarde to indicate a willingness to cut policy rates further but refuse to be drawn into speculating on the October meeting.
  • Instead, Lagarde is set to reaffirm the bank’s data-dependent and meeting-by-meeting approach.
  • OIS price 34bps of easing through October, and 62bps through year-end.
  • A reminder that the ECB will also narrow the corridor between its three key interest rates at today’s meeting, following the bank's Framework Review in March.
  • Our ECB preview is here.
Meeting DateESTR ECB-Dated OIS (%)Difference Vs. Current Effective ESTR Rate (bp)
Sep-243.416-24.9
Oct-243.330-33.5
Dec-243.047-61.7
Jan-252.817-84.7
Mar-252.506-115.8
Apr-252.286-137.8
Jun-252.075-159.0
Jul-251.985-167.9
Source: MNI/Bloomberg.