ECB likely to lower deposit rate around mid year

The recently released ECB's December policy meeting gave some idea regarding policy tools. According to the data, the ECB is concentrating on shifts in the medium-term inflation outlook, indicating that the central bank might eventually announce additional package of measures. 

There is a likelihood for additional TLTROs. There was broad agreement on the ECB Governing Council that extending the timeline or monthly purchase amounts of QE was not warranted then, but the council kept the door open to these actions at a later date.  

The recent economic data continues to indicate towards weak growth in Q4 2015, but there have been moderate upside risk. However, additional weight will be on business surveys for the underlying pace of growth. The upcoming January flash PMI for the euro area will be an important data. Hence, Barclays expects softer actual and expected euro area inflation, along with the appreciation in the trade-weighted euro and its negative effect on financial conditions, to push the ECB into further action around mid-year.

On the other side, easing economic activity, an absence of domestic inflationary pressures, and timing risks associated with the EU referendum has also caused Barclays to push back their call for a rate hike by the BoE from Q2 to Q4 16.