Cyprus’s troubles offer Mario Draghi an “excellent justification” to cut interest rates further at Thursday’s European Central Bank meeting, according to a research note by Dutch bank ING.
“Since the beginning of the year, financial market participants have frequently speculated on a possible ECB rate cut. Up to now, the ECB has resisted the temptation,” wrote Carsten Brzeski, a senior economist at ING based in Brussels.
“However, the changes in the macro environment since the last meeting and the aftermath of the crisis in Cyprus and its possible long-term impact on all euro zone banks could provide the ECB with an excellent justification for cutting rates at this week’s meeting.”
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