Surveyed analysts expect the Bank to stand pat on rates this time around; however, market pricing currently assigns a 100% probability of a 10bps reduction to the deposit rate with a further 10bps priced in by September.
The meeting takes place against a backdrop of severe economic uncertainty in which the full extent of the COVID-19 outbreak remains unknown. However, containment efforts across the continent have certainly impaired economic activity and as such, heightened calls for stimulus from the Governing Council.
It remains to be seen whether the ECB will adopt a wait-and-see approach or unveil supportive measures, which could include rate reductions, expansion of the APP, adjustments to tiering thresholds, sweetening of the terms of existing TLTROs, financing measures for SMEs.
The latest Reuters survey (carried out on March 5th) saw 41/52 economists expect the deposit rate to be unchanged at -0.5% with the remaining 11 looking for a cut of 10bps to -0.6%, all surveyed analysts look for the main refinancing rate to be left at 0%.
Given current market conditions and pricing, such surveys are likely to be deemed as stale by the investors. Instead, greater guidance could be sought from market pricing which looks for 100% probability of a rate reduction this week, with a further 10bps reduction priced in by the September meeting.