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ECB may bide its time, but action needed very soon

The European Central Bank (ECB) may refrain from loosening policy this month following the Bank of England’s inaction. But the Brexit vote has increased what were already significant downside risks to the euro-zone economy and the inflation outlook remains dismal. We therefore expect the ECB to at least pave the way for more policy support in September, probably involving an interest rate cut and bigger asset purchases.

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