ECB: Further QE measures not likely to be approved in September - BBVA

Today the European Central Bank (ECB) kept rates unchanged and hinted at a stimulus package. According to the Research Department at BBVA, 

Key Quotes: 

“The ECB kept rates unchanged but reintroduced the easing bias on rates, requested studies on further measures and, importantly, started talking about a symmetric inflation aim Draghi is worried about inflation and the macro outlook of manufacturing.”

“Markets were even more dovish, pricing in a depo cut as soon as today with 50% probability and more clear signs of further QE.”

“Today’s statement and press conference was one of those examples of pre-announcement of upcoming measures. It seems quite clear now that a depo cut will be decided soon (we expect it for September now) together with a tiered system. Forward guidance will also be changed (no longer calendar-based).”

“We still think that further QE measures will not be approved in September, given the lack of unanimity, and the need to keep a second bullet in case it is needed (Draghi recognized during the press conference that the effectiveness of further QE is debatable). But its probability has no doubt increased.”