ECB likely to cut DFR by 10 bps in June 2020

The European Central Bank is unlikely to downwardly revise its baseline before the second quarter of 2020, according to a Barclays research report. The core consumer prices of currency bloc are expected to catch up rapidly to levels in line with the ECB’s medium-term price stability target by 2021.

“We expect the ECB to cut the DFR once more, in June next year by 10bp, taking it to -60bp to increase the tiering multiplier in H1 20”, stated Barclays.

Meanwhile, the ECB President Lagarde is expected to keep working on re-building unity within the Governing Council, calling for fiscal policy to act where there is room to do so and focusing on the upcoming strategic review, added Barclays.