Next ECB Council meeting – what can be expected

In the coming week, the eurozone’s monetary custodians are scheduled to hold their regular meeting to discuss the appropriateness of their monetary-policy stance. Given that ECB representatives already adjusted their monetary-policy settings at the March Governing Council meeting (forward guidance / TLTRO-III), we are not anticipating any milestone decisions to be announced this time round. Unfortunately, it is to be assumed that the ECB will continue to keep its cards close to its chest regarding details of the new TLTRO-III operations. At the press conference following the Governing Council meeting, at the latest, the current market speculation about the introduction of a multi-tier deposit rate is likely to be aired. This topic is the subject of controversial debate in the financial market as well as at the ECB. One of the aspects which we regard as being problematic in this connection is that the ECB would send out contradictory signals by shifting to a tiered deposit rate. Where forward guidance is currently indicating an unchanged key-rate level, the debate about a multi-tier deposit rate design is fuelling speculation about rate cuts. In principle, we are therefore sceptical about this initiative.


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