Nick Kounis, the head financial markets research at ABN AMRO, expects the ECB to cut all its policy rates by 10bp at the September meeting, followed by another 10bp step at the December meeting.

• “Both moves are more than priced in by financial markets. Economists – according to the Bloomberg Poll – expect a 10bp cut in the deposit rate in September, but no change in December.
• For the ECB to surprise on the upside, it would need to cut policy rates by 20bp next month. However, it will likely be reluctant to do so. As it moves policy rates into unchartered territory, with uncertainty about the impact of more deeply negative rates on banks and the transmission mechanism, it may well decide to move in smaller steps. The last four ECB reductions in the deposit rate have each equalled 10bp, probably reflecting this reasoning.”