A Bloomberg survey in late June showed only 42% of the economists surveyed expected the ECB to restart the asset purchase programme.
Expect more rate cuts, deposit tiering and QE-II in September
The central bank kept its key policy rates unchanged at this week’s policy meeting but set the stage for rate cuts and a package of easing measures, likely to be announced in September.
We continue to expect a package of measures to be announced in September, when the new set of staff macroeconomic projections are released. The steps are likely to include a rate cut, the introduction of a multi-tiered deposit rate and the restart of QE. The Governing Council may also drop the practice of saying how long it expects policy rates to stay where they are or fall further.
On 12 September the ECB announced a stimulus package delivering all the elements we had forecast: a 10bp rate cut, reserve tiering, restarting QE and removing any date reference in its forward guidance.