ECB's Trichet Says Central Bank May Cut Again In November

Daily Forex Fundamentals | Written by DailyFX | Oct 27 08 15:10 GMT |

In a recent interview, ECB President Jean Claude Trichet said the policy authority may once again ease lending rates at its November 6th meeting in response to the ongoing credit problems and the deterioration in global economic conditions. For those unfamiliar with the central banker's semantics, his merely opening the market to the possibility may seem uneventful; but those familiar with his methods know his history of transparency and know this more or less sets up a cut next week. This is particularly meaningful for the euro as the European Central Bank's maintenance of rates on the basis of inflation alone had kept the currency at its highs. The shift in outlook and exchange rates has been dramatic. When asked how large such a cut may be, Trichet wouldn't comment; but the market is clearly pricing in substantial easing over the coming years, so a 50bp cut would not come as a surprise. Further confirming the high probability of further easing though, the President suggested that the pull back in inflation was significant and convincing; while wage and price setters were begin to capitulate to economic conditions. The theme of his statement could be summed up by his admission that he would not underestimate the gravity of the market's current situation. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.