{"id":2520,"date":"2008-01-17T11:15:54","date_gmt":"2008-01-17T11:15:54","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2520"},"modified":"2025-03-27T15:48:34","modified_gmt":"2025-03-27T15:48:34","slug":"ecb-ometer-still-suggesting-neutral-stance","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2520","title":{"rendered":"ECB-ometer still suggesting neutral stance"},"content":{"rendered":"<p>For the last couple of months my ECB-ometer model has suggested a neutral policy stance was warranted by economic data and financial market developments (see <a href=\"http:\/\/www.moneymovesmarkets.com\/journal\/2007\/11\/26\/ecb-ometer-suggesting-shift-to-neutral-policy-stance.html\">here<\/a>). The statement issued after last week&rsquo;s ECB meeting retained a hawkish slant but, as the <a href=\"http:\/\/www.ft.com\/cms\/s\/0\/e5557816-c47a-11dc-a474-0000779fd2ac.html\" target=\"_blank\">FT<\/a> has reported,&nbsp;comments from officials this week have been more ambiguous and may indicate the balance of opinion on the Governing Council is shifting. <\/p>\n<p>The ECB-ometer attempts to estimate the average interest rate recommendation of Governing Council members each month. A reading of above 12.5 basis points generates a forecast of a 25 bp rise in the ECB&rsquo;s repo rate; below -12.5 bp predicts a quarter-point cut. The chart below shows the history of official interest rate changes and the model&rsquo;s forecasts since the ECB&rsquo;s inception . <\/p>\n<p>Based on the latest information, the ECB-ometer&rsquo;s forecast for the February ECB meeting is 0 bp, implying an exactly neutral policy stance. The ECB may be toning down its hawkishness but the model suggests economic news needs to change significantly to warrant hopes of a rate cut. As well as more evidence of a serious slowdown, Governing Council members are likely to require falls in money supply expansion and household inflation expectations before contemplating a dovish shift. <\/p>\n<p>The recent small decline in the euro may indicate the market is sensing a turn in the Eurozone interest rate cycle but a sustained reversal against the dollar probably also requires investors to believe that the next cut in US official rates will be the last for some time. <\/p>\n<p><span class=\"full-image-float-none\"><img decoding=\"async\" style=\"width: 500px; height: 300px\" alt=\"1MChangeInECB.jpg\" src=\"\/storage\/1MChangeInECB.jpg\" \/><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>For the last couple of months my ECB-ometer model has suggested a neutral policy stance was warranted by economic data and financial market developments (see here). The statement issued after last week&rsquo;s ECB meeting retained a hawkish slant but, as the FT has reported,&nbsp;comments from officials this week have been more ambiguous and may indicate [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2520","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2520","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2520"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2520\/revisions"}],"predecessor-version":[{"id":4829,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2520\/revisions\/4829"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2520"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2520"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2520"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}