Analysts at Rabobank notes that the ECB tried to convey confidence after its March meeting, but at the same time slashed its forecasts.
Key Quotes
“Its policy actions, too, paint a different picture. Despite its self-proclaimed confidence, the ECB acted more resolute than the market had anticipated – suggesting that there was at least some sense of urgency within the Council.”
“The ECB announced TLTRO-III, but the modalities contradict the reasons cited for these operations somewhat.”
“Despite the substantial flattening that has already taken place since the last ECB meeting, we see substantial risk of further flattening ahead; particularly from the mid-2020 points outward. This view is based on our expectations that the ECB will not get the chance to hike rates next year, on the back of growing concerns about a US recession, culminating in the FOMC cutting rates from June 2020 onwards.”
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