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Pros Say: Euro Zone Rates Likely to Bottom at 0.5%

The European Central Bank is widely expected to cut interest rates by 50 basis points Thursday, to a record low of 2 percent. But how low will the central bank go? Experts tell CNBC euro-zone rates could bottom at 0.5 percent.

ECB Rates Likely to Bottom at 0.5%

Expect more ECB rate cuts after Thursday's widely expected 50 basis point cut. Magnus Prim, chief strategist Asia, trading strategy at SEB Merchant Banking thinks ECB rates will probably bottom out at 0.5%.

A 50 Basis-Point Cut

Like many others, Rainer Guntermann, Eurozone economist at Dresdner Kleinwort is expecting the ECB to make a 50 bps rate cut Thursday, adding that its rate easing cycle is likely to continue.

ECB Has Done a Good Job

The European Central Bank has done well as it had played a much smoother game with interest rates than any of its peers, says Clem Chambers, CEO of ADVFN. He tells CNBC why he thinks that is a sign of good management.

A New Rate Cycle for the ECB?

We have a new interest-rate cycle in the US and UK similar to that of the Japanese cycle of the last 10 years, and "I wouldn't be taken by surprise if we (ECB) follow the same direction sooner or later, Allan Valentiner from Johannes Fuhr Deutschland said ahead of the euro-zone rate decision.

He suggests investors "buy short corporates and long-dated government bonds".

Tough for Euro to Rally

It will be difficult for the euro to rally markedly over this period of time, says Olivier Desbarres, director of FX strategy at Credit Suisse. He tells CNBC what needs to happen before the currency rebounds.

Weak Pound Creates Investment Opportunities

The pound may be at a bottom, therefore now may be a good time to buy overseas assets, according to Michael O'Sullivan from Credit Suisse. Elissa Bayer from Charles Stanley said that caution must be taken in the current market.

UK Should Join Euro Now

Euro zone members haven't had the same fluctuations in the exchange rate and weak currencies don't help exports because of the weak global economy, Roland Rudd, chairman at Business for New Europe, told CNBC.

Bonds Are Favorite Investment

A rally for stock markets is out of cards for the next few months, and the signal for a recovery will come from the credit markets, Didier Duret from ABN Amro Private Banking told CNBC. "Our favorite asset class at the moment is investment-grade bonds," Duret said.

The U.S. Dollar Will Gain

"We think the dollar is still the safe-haven currency in this risk-aversion environment, people are trying to get out of risky assets. The Fed has done what is necessary," Antje Praefcke, currency strategist at Commerzbank, tells CNBC.

Power of the Japanese Consumer

It is the household sector, not the corporate sector, that will drive Japan's economic recovery, says Jesper Koll, president & CEO at Tantallon Research, after the November's weaker-than-expected machinery orders.

Australian Economy May Return to Growth by Q4

Clifford Bennett, chief economist at Kinetic Securities expects the Australian economy to return to a positive growth path as early as the fourth-quarter.

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