- At today’s meeting, the Governing Council strengthened its forward guidance on rates, made clear that this guidance will be strengthened further, and de facto announced new QE.
- The key triggers for forthcoming action are the medium-term inflation outlook and slower growth.
- Draghi adopted a very dovish tone and in the introductory statement the symmetry of the inflation target was mentioned for the first time.
- Bold measures will likely be announced in September. We continue to look for a restart of QE amid a 10 bps deposit rate cut, the strengthening of the forward guidance and the introduction of a tiered deposit rate system.
- Depending on the extent of the downturn we see further measures in the pipeline in 2019 with another 10 bps deposit rate cut in December already our base case.