The ECB is expected to deliver a package of easing measures at a March 10 meeting, or risk disappointing markets that are already pricing aggressive action.
Expected policy measures include a deposit-rate cut by at least 10 basis points, an increase of 10 billion to 20 billion euros in monthly asset purchases and an extension of the program, economists and strategists say in client notes and interviews. The ECB is also likely to announce downward revisions to CPI and GDP forecasts, which would probably lead to broader consensus among governing council members for more easing.
Some forecast from major bank’s .., with how much ECB will cut the rate’s ?
Goldman Sachs expects the ECB to cut the deposit rate by 10 basis points, though any more would probably meet resistance from several members who have concerns about the possible negative impact on the banking sector.
JP.Morgan expects the ECB to deliver a deposit-rate cut of 20 basis points to -0.5 percent in March, and to bring it to -0.7 percent by June.
Bank of America Merrill Lynch expects the ECB to cut the deposit rate by no more than 10 basis points, which is what’s currently priced in markets. The central bank is probably realizing a deposit-rate cut bigger than 10 basis points could be counterproductive.
Whether the ECB will need to ease even further in the future will depend more on global, rather than domestic developments.There are limits to ECB policy, but they have not been reached yet. QE could be boosted, and getting rid of the capital key or issuer limit would be the next steps after March in this case. Further policy rate cuts are also possible.The ECB will be keen to remind investors that it can buy pretty much everything, including bonds and equities The central bank will probably extend QE to at least more “quasi- government” corporates, and ideally to forms of synthetic investment-grade credit assets.
European market’s :
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