ECB: Further easing - Rabobank

Rabobank analysts note that Draghi clearly hinted at further easing at the ECB’s annual conference this week.

Key Quotes

“He may have blindsided part of the Council, making it hard for them to hold off on stimulus.”

“We believe that further rate cuts are now in order, starting in September and –ultimately– leading to a (tiered) deposit rate of -80bp by June 2020.”

“While new asset purchases are still on the table, we believe that significant deterioration in the economy is a prerequisite, and not just lingering uncertainty.”

“The biggest risk to our new (and admittedly bold) forecast for further easing is an ablation of uncertainty. Another unknown is how keen Draghi’s successor will be to deploy additional stimulus measures.”