• The key risk event in the Eurozone this week is without a doubt the ECB meeting. However, do not expect the ECB to reveal the full operational details of the new TLTROs just yet. Furthermore, it’s also too soon for Draghi & Co to announce operational details of a tiered deposit facility. In fact, the proverbial tealeaves suggest that the Governing Council has only just agreed on tiering, or is close to agreeing.
  • ECB-speakers have mentioned that the full operational details of the TLTROs will be announced in June. A key design feature that the ECB hasn’t yet revealed is the so-called ‘teaser rate’. The teaser rate is the rate that will apply if the banks meet certain lending conditions. Consensus surveys from Reuters and Bloomberg give the impression that the teaser rate will be a very important factor. The more the ECB rewards banks for kick-starting lending, the bigger the credit impulse for the sagging Euro Area economy. Or so the reasoning goes. To read the full report, click HERE