Nick Kounis, head of financial markets research at ABN AMRO, suggests that their base case is that the ECB will further push out its forward guidance on the period of unchanged policy rates and ongoing reinvestments.

“The modest trajectory for economic growth will not be sufficient for underlying inflationary pressures to build. We think that ECB forecasts for growth and inflation remain too high despite recent downgrades. Our base case is that ECB policy interest rates will remain on hold through to the end of 2020 and that reinvestments will continue to the end of 2021. However, the risks are to the downside and the probability is rising that the ECB will need to step up stimulus and restart QE. Market pricing on the timing of the first ECB rate hike has converged towards our base case over recent weeks.”