ECB: Moving closer to a round of global policy easing – Deutsche Bank

Deutsche Bank analysts suggest that in today’s ECB meeting, we should move closer to what is likely to be a round of global policy easing in the months ahead.

Key Quotes

“Mr Draghi paved the way at Sintra last month where he laid the foundations to make further policy easing feel less conditional.”

“September is the natural occasion for the big decisions and details but expect some preparation today. They expect the "or lower" easing bias to be reintroduced into rates guidance and that this will be the prelude to a 10bp deposit rate cut and tiering in September. They also expect a further 10bp cut in December.”

“They also believe we will see upgraded forward guidance used to underline the ECB's "absolute commitment" to the price stability mandate. If the Council is unable to strengthen forward guidance sufficiently, a new wave of net asset purchases may be required in the not too distant future. If so, the team would not be surprised by new QE of EUR30bn per month for a minimum 9-12 months split equally between public and private assets and with a commitment to relax the limits if necessary.”