For the ECB, we think that the refi-rate will be cut by 25 basis points to 0.50%, while also some other measures aimed at repairing the transmission mechanism might be announced. Mr. Draghi opened the door for an easing of policy last month when he said the ECB was ready to act if needed. Since the eco data have not improved, probably even weakened further, including in the core. Prices have cooled and the recent drop in commodity prices together with ongoing negative growth will drag inflation further away from the target. Monetary data and the bank lending survey also point towards room to ease policy.
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KBC