ECB ready to ease again – we now expect a rate cut in September

ECB president Draghi’s speech i n Sintra send a strong signal that he is keen on eas ing monetary policy sooner rather than later. Although Mr Draghi seemed to be front-running the discussion in the Governing Council with his intervention , we think that there will be a sufficient majority in the GC for a cut in the deposit rate by 10bp at the September meeting. We also expect the forward guidance to be adjusted, implying that policy rates will be kept “at the current or lower level until the end of 2020” .