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ECB should not abandon negative interest rates this year – Reuters poll

A Reuters poll recently released puts the euro zone's economic activity bottoming out, noted by 47 of 60 economists. The ECB should not abandon negative interest rates this year, say 46 of 57 economists.

Meanwhile, analysts at Rabobank explained that the ECB has adopted a modestly optimistic view of the Eurozone economy and inflation.

Key points

  • The Council sees the latest inflation projections as “rather conservative” and the bar for new stimulus has been raised somewhat.
  • However, we argue that this also means that any setback that could lead to a new shortfall in inflation might warrant action.
  • Based on our global outlook we see the Eurozone economy slow down further this year, ultimately forcing the ECB to pile on more stimulus. We now expect the next move in June.
  • The Council concluded in December that the ECB had not yet reached the reversal rate. So we still see rate cuts as a likely response.

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