ECB: We expect another rate cut by 25bps in December | Eurobank
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ECB: We expect another rate cut by 25bps in December

• Mr. Draghi surprised by cutting rates by 25bps. Although unexpected, the rate cut is justified by materializing downside risks.
• Full reversal of the monetary tightening cycle is anticipated in December. We believe the ECB would feel uncomfortable to deliver further rate cuts. Therefore, we expect the policy rate to remain unchanged at 1% at least until the end of 2012.
• There were no comments suggesting a more decisive use of the SMP program. Although the ECB did not take center stage in the recent decisions taken to combat the euro area crisis, we believe that its theoretically unlimited ability for intervention is required to manage the crisis and should be implemented whenever the need arises.