Surveying the zero bound with caution

After cutting interest rates last month and hinting that more support might be to come, we suspect that the ECB will disappoint markets at its forthcoming policy meeting and press conference. President Draghi is likely to say again that further interest rate cuts are possible. But he will probably voice concern about the potential side effects of negative deposit rates, denting hopes of imminent action on that front. Meanwhile, he is likely to state that any purchases of asset-backed securities would be made by the European Investment Bank rather than using the unlimited firepower of the central bank.