ECB interest rates & required reserves; EU-China trade

The huge decline in energy prices over the past two months, together with June's HICP data, suggest that euro-zone inflation will be even lower in the near term than in the ECB's "milder scenario". Meanwhile, we doubt that the increase in reserve requirements which the ECB is considering would have a noticeable impact on bank lending. And we are sceptical that new talks between the EU and China will result in any major changes to trade policy.