- The Governing Council’s major concern is about prolonged uncertainty but the base case of continuing growth is still seen intact while measures to protect the euro area economy are needed.
- Within the Governing Council (GC) some members even opted for easing measures. In the end they unanimously agreed on the following:
o To leave key rates constant “at least through the first half of 2020” thereby extending its forward guidance by six months.
o In the forthcoming TLTROs the rate applied can at best be 10 bps above the average deposit rate prevailing over the life of the operation. This was less generous than anticipated by market participants.
- The ECB has moved into a wait-and-see stance with heightened attention to downside risks. It has postponed policy normalization further and we now do not expect any rate hike until the end of next year at least.
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