European Central Bank (ECB) member Benoît Cœuré noted that the implementation of a forward guidance has deterred market volatility and the Eurozone monetary authority continues to have an easing bias which makes further rate cuts possible.
While admitting that it was too early to determine if the forward guidance had "worked", Cœuré was convinced that in its absence, "money market rates would have displayed more upward volatility than was observed."
The ECB member did make clear that the central bank was not targeting specific value for money market rates, but sought to make sure that "their fluctuations remain within reasonable bounds and do not hurt economic recovery".
According to Cœuré, the guidance itself is a useful tool that "explicitly incorporates an easing bias, thereby accounting for the possibility of further cuts in policy rates".
The majority of analysts currently expect ECB rates to remain at 0.5% until April 2015 and, rather than a cut, expect another round of long-term refinancing operations (LTROs) designed to flood credit markets with liquidity. The new LTRO could be implemented as soon as the end of the year, according to a recent Reuters poll.
Source: LiveCharts
While admitting that it was too early to determine if the forward guidance had "worked", Cœuré was convinced that in its absence, "money market rates would have displayed more upward volatility than was observed."
The ECB member did make clear that the central bank was not targeting specific value for money market rates, but sought to make sure that "their fluctuations remain within reasonable bounds and do not hurt economic recovery".
According to Cœuré, the guidance itself is a useful tool that "explicitly incorporates an easing bias, thereby accounting for the possibility of further cuts in policy rates".
The majority of analysts currently expect ECB rates to remain at 0.5% until April 2015 and, rather than a cut, expect another round of long-term refinancing operations (LTROs) designed to flood credit markets with liquidity. The new LTRO could be implemented as soon as the end of the year, according to a recent Reuters poll.
Source: LiveCharts
