ECB ends rate cut speculation
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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