The market is pricing in just a 20% chance of a large ECB rate cut on December 12 but JPMorgan thinks that's not enough. They're out with a new note calling for 50 bps.
Today's prelim eurozone core CPI reading for December was 2.7% compared to 2.8% expected. The headline number creeped up to 2.3% from 2.0% but the ECB's Villeroy was quick to dismiss it.
“We have some good news, inflation has slowed and is going toward our target,” he said in Dijon on Friday. “We will therefore probably be able to continue to lower interest rates.”
He added that “in our projections — beyond monthly variations — we are confident that we will reach our target next year, and probably in the first half of next year."
The ECB's deposite facility rate is at 3.25%.
