ECB rate decision is the mega events today. It’s widely expected to announce a package of stimulus measures. But up till now, it’s unsure what the exact package would be. Opinions are rather divided, leaving much room for disappointments for both sides. Additionally, ECB will release new economic projections which would be closely watched too.
Here is our take on the package:. 1. Deposit rate cut by -20bps to -0.60%. 2. Two-tiered system to exempt some backs on paying deposit interests. 3. Restart QE at EUR 30B per month. 4. Adjustments to TLTRO. 5. Change of forward guiance to keep interest rates low well past horizon of QE.
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