The ECB is almost certain to cut interest rates by 25 basis points to 1% this month, where they should remain for some time. But after last month’s hints that further unconventional policies could be announced at this meeting, the key interest will be in how much more the Bank will do. At the very least, it looks set to extend the maturity of its loans to commercial banks. But we also think that the Bank might outline a framework for quantitative easing involving outright asset purchases even if is not ready to take the plunge quite yet.
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