Dealers price in further .25% ECB rate cut

EUROZONE interest rate futures are still pricing in a quarter point cut in European Central Bank (ECB) rates by September, with dealers undeterred by an apparent change of tone from the ECB chief.

In an interview yesterday ECB president Wim Duisenberg said it was too soon to discuss further eurozone rate cuts. This pushed interest rate futures off contract highs set on Tuesday after Mr Duisenberg was reported saying the ECB had not exhausted its ammunition for rate cuts but did not dampen the rate cut talk for too long.

“The ECB is still dovish and it is more a question of the timing and extent of rate cuts and not if rates will be cut,” said Christoph Rieger, interest rate strategist at Commerzbank in Frankfurt.