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ECB ends rate cut speculation

By   || January 3, 2009 at 11:41 GMT
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The 2009 outlook has already deteriorated beyond the ECB’s December forecasts and the Bank still has room to cut, says influential permanent board member Papademos. Look for a 50 basis point cut on January 15.

Anticipation of that cut should keep EUR/USD weighed down on shrinking interest rate differentials and a loss of credibility for the ECB. They are beginning to look as decisive as Hank Paulson by signaling a pause and then resumed rate cuts all in the same month. Nice of Trichet to trot out Papademos to take that bullet for him.

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