Jan von Gerich, analyst at Nordea Markets, suggests that the size and composition of any further ECB easing would naturally depend on the severity of the situation.
“Given that there are few easy options and the potential to ease policy further, the ECB may again decide to put many smaller components together to come up with a package of measures. Such a package could consist of
- Strengthened forward guidance
- 10bp cut in the deposit rate along with leaving the door open for further cuts and introducing a tiered deposit system
- More net purchases of bonds”
“Given that another round of easing measures will increase the risks central banks area taking and no so-called easy options are left the ECB will think carefully about how it wants to use its remaining easing capacity. We find the July meeting unlikely and tend to think that the decision could come in September at earliest.”
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