The ECB has given a hint of adjusting its asset purchase program along three tools, such as time commitment, pace, and composition. A change in time and pace may be expected, but it is a less effective toll to influence exchange rate.
Since the euro area experiencing lower core inflation outlook, the ECB will choose a monetary tool that will help the Bank to correct the inflation outlook.
"The ECB could cut the deposit rate by 10bp and provide the market with forward guidance of further cuts. Another option would be to cut 20bp and signal its willingness to cut more if needed", argues Barclays.


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