It seems that various ECB officials have been busily doing the rounds proclaiming that no decision has been taken upon negative deposit rates, says Commerzbank.
"This is despite the fact that we know of commercial and retail banks already being technically prepared for such an eventuality and the fact that the ECB has been analyzing the effectiveness of such a move," CB adds.
So, where does this leave the possibility of negative rates this year? A distinct eventuality, CB answers.
"Aggregate inflationary developments across the euro zone remain muted (despite yesterday’s higher than expected German CPI print) whilst unemployment continues to surge ever higher. Given that governments remain fiscally constrained, it stands to reason that the only way to stimulate aggregate demand is via ever looser monetary policy: say hello to negative rates," CB clarifies.
As such, CB recommends to its clients to keep selling EUR/USD into rallies over the coming weeks.
Read more: http://www.efxnews.com/story/19022/say-hello-negative-rates-europe-and-keep-selling-eurusd-rallies-commerzbank
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