LONDON (Reuters) – Commerzbank said on Wednesday that it has now bought forward its expectations for an interest rate cut from the European Central Bank to July from the fourth quarter of this year.
The change in forecast follows comments by ECB chief Mario Draghi on Tuesday that the central bank will ease policy again if inflation fails to accelerate.
“Yesterday’s speech in Sintra may well be remembered as opening the door for the next round of large-scale stimulus, similar to his Jackson Hole speech in 2014,” analysts at Commerzbank said in a note.
“In essence, the ECB could no longer tolerate the adverse mix of collapsing inflation break-evens and rising real yields since the meeting two weeks ago.”
(Reporting by Dhara Ranasinghe, editing by Karin Strohecker)