• ECB meeting largely met expectations, indicating a very likely rate cut in September

• Forward guidance change reaffirms markets being fully priced for September

• Suggests that a 10 bps deposit rate cut will be delivered

• Detail on other potential stimulus measures is not clear, but ECB are clearly making preparations in that regard

• Expects a cut will be delivered in September as part of a broader stimulus package

"We expect that the cut in September will be followed by a tiered deposit rate to mitigate the pressure on banks and that asset purchases of sovereign bonds will be restarted. Our expectation is for the ECB to introduce a €30bn per month program in December lasting for a year at this stage. For that to occur, the ECB will need to increase their self-imposed issuer limits from the current 33% given German Bunds are already at that limit. For example, given €1.6tn of Bunds outstanding, a new issuer limit of 45% would allow room for the purchase of ~€200bn bunds, and with Bunds representing roughly 25% of purchases, that would create room for ~€800bn of total sovereign European bonds." Westpac said.