Nick Kounis, head of financial markets research at ABN AMRO, says ECB account of the March Governing Council meeting suggested that the central bank still maintains a cautious stance in reacting to the slowdown.

• “This reflects the Governing Council’s ‘confidence … that the conditions for a rebound in activity and inflation remained in place to support a sustained convergence of inflation rates towards levels below, but close to, 2% over the medium term’.”
• “Although there was some officials calling for a longer extension of the forward guidance on interest rates (to March 2020), the majority opted for a shorter extension (to the end of this year) as ‘a data-driven gradualist approach was seen as most appropriate’.”
• “In addition, the maturity of the TLTRO-III also suggested a conservative reaction. The Governing Council noted that ‘a shorter horizon would provide a stronger signal to banks that they needed to be prepared to secure funding on private markets and avoid becoming overly reliant on central bank funding’.”
• “The ECB was trying to strike a balance between alleviating a re-funding cliff and pushing banks gradually away from reliance on ECB liquidity.”