The ECB will keep all options open, but now is the time to communicate, not act
22 July 2019
The next ECB meeting is scheduled for July 25th.
Please find below what we expect:
- We expect a change in forward guidance with policy rates “at present levels or lower” and an extension to September or December 2020, preparing the market for potential rates cut in September.
- We expect no change in deposit rates.
- We expect the governing council to keep all the options open before the September meeting including:
- Potential rate cut;
- Aier deposit system;
- A new round of quantitative easing.
- We don’t expect mention of symmetry of the ECB’s inflation objective, but this topic could be discussed during the Q&A.
The language should stay very accommodative, in line with recent declarations at Sintra. We do not expect notable market reaction considering current market pricing already reflecting dovish expectations
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