## Global recovery is still on track
## ECB is expected to change direction
It seems that ECB President Draghi has finally convinced his colleagues from the Northern part of the Eurozone that further easing steps need to be explored. Although worries remain justified that the ECB will act by too little and too late, the implicit message that a rate cut will be delivered on 5 June has eased financial conditions in the region by driving down yields and the currency and by supporting equity markets.
Whether this impact on markets will prove to be lasting and thereby will generate a positive feedback loop towards the growth and inflation outlook will mostly depend on the details of the actual action that is delivered, i.e. by which degree the deposit rate will be pushed below zero and what type of additional easing measures will be taken or hinted at.
We expect a 15 basis points cut in both the refi and deposit rate and possibly some measures that will include the use of the ECB’s balance sheet.
## Search for yield will push investors to (European) equities