Comments from Coeure in an interview with Bloomberg:
- ECB may not add long-term loans as growth recovers
- ECB will take downside inflation risks into account
- Deposit rate can be cut below zero if needed
- Monitoring money-market rates very closely
- ECB ready and willing to strengthen rate guidance
- Power of fixed-rate, full-allotment underestimated
- ECB worries about steepening of money market curve
The market has slowly backed away from expecting fresh LTROs to cover for the expiration of the original round and Coeure is making it clear that’s the right interpretation. The euro likes it as it pops back close to the highs of the day at 1.3645.
The exact quote: “It may be the case that the standing facilities are enough to ensure the appropriate level of liquidity; if this is not the case, then we would act.”
