Euro area inflation likely at 1.0% in 2015

In order to face the current ongoing economic challenges, the ECB opted to cut a deposit rate by 10 base points to -0.3% and kept all other rates unchanged. The Bank extended its asset purchase program for another 6 months and decided to reinvest the principal payments on the securities purchased under the program. The monetary expansion of the ECB is more than expected.

In addition to the rate cut, the central bank revised down its inflation projections for 2016 and 2017. HICP inflation rate is revised down by 1 point to 1.0% and 1.6% in 2016 and 2017 respectively. 

The Bank confirmed that expansionary monetary policy and QE program will be in place till 2017. This will lower the bond yields and depreciate euro as well, says Nordea Bank.