In a note just released by JPM’s Greg Fuzesi, the JPM analysts says that “with the Euro area economy entering a potentially deep recession, we now think that the ECB will cut its main policy interest rate to just 0.5% by mid-2012. We expect the interest rate corridor to be narrowed to +/-25bp, so that the deposit facility rate will be 0.25%. We recognise that the ECB did not cut rates below 1% during the 2008/9 recession. It never fully explained why it did not, but we think that the two most likely reasons will be less important this time.”
via Euro Tumbles As JPM Predicts ECB Rate Cut To 0.50%, “Deep Euro Area Recession” | ZeroHedge.