On Thursday Europe’s Central head was less inclined to cut interest rates. Mr. Mario Draghi’s tone suggested that the US Central Bank will keep to a quarter-point cut-rate next week.
This occurred because some market pros were expecting to see a more dovish surprise from the Europe Central Bank. The Bank did promise more asset buying and rate cuts, but later.
As some has suspected, the outlook now remains if the Fed will trim rates by just a quarter percentage point, not a half-point.
The European Central Bank keeps the rates steady, although mentioned that it could lower them in upcoming months.
However, when Mr. Draghi spoke after the meeting he was unaggressive but did not provide more details on asset purchases.
Mr. Draghi said the odds are low for the European Economy to head for a recession.
Ward McCarthy Chief Financial Economist at Jefferies said, “Mr. Draghi made a lot of promises but he didn’t do anything actually. He came out of the starting gates fast but did not deliver on those expectations.” According to the sources.
Mr. McCarthy further added, “I think the expectation was that he would be more commital than he was. There was an expectation that the European Central Bank was ready to move sooner. This had knock-on expectations for Fed next week.”
The result came out to be quick, a wild swing in the bond markets and the Euro which has slipped to a year low before totally reversed its move to be higher on the day.
“The thinking is maybe those that we’re expecting a 50 basis point cut should downgrade those expectations.” According to the sources, said Mr. McCarthy.