Just to get this out first: the Bloomberg consensus forecast for Thursday ECB’s meeting is Draghi & Co cutting the deposit rate by 10bps and launching a modestly sized QE program of 30 billion euros for 12 months. Only a small minority expects the ECB to make the new TLTROs more attractive. For what it’s worth, sell-side economists also expect the ECB to signal that policy rates will stay at present or lower period through at least the first half of 2020 to be pushed back, and that another 10bps deposit rate cut to be announced around the turn of the year (so at one of Lagarde’s first meetings). The survey didn’t mention anything on tiering of the deposit facility, though our reading of the tea leaves is that the ECB tiering the deposit facility is a given. Our forecast still is 10bps cut of all policy rates plus a QE program of 40 billion euros for 12 months to be announced on Thursday. We still see another rate cut of 10bps. That’s likely going to be a deposit rate cut only of 10bps in December or January, just when Lagarde has taken the helm in Frankfurt.

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