File - A June rate cut is “more or less a done deal.”
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The European Central Bank is preparing a package of policy options for its June meeting, including cuts in all its interest rates and targeted measures aimed at boosting lending to small- and mid-sized firms.Five people familiar with the measures being prepared detailed plans involving a potential rate cut, including the ECB's deposit rate going negative for the first time, along with the targeted measures SME measures. ECB Executive Board member Peter Praet also told German weekly newspaper Die Zeit the central bank could cut its deposit rate into negative territory as part of a package of policy measures that could also include a targeted long-term refinancing operation.The first two sources spoke to Reuters of a cut of 10-20 basis points, probably in all three ECB rates.The ECB declined to comment when asked about the plans.The ECB's fixed-rate full allotment procedure sees it lend banks as much cash as they want at a fixed interest rate at its regular refinancing operations.The operation could be even longer than 3-year LTROs the ECB deployed in late 2011 and early 2012 to head off a funding crunch.As an alternative to the targeted LTRO, the ABS purchase plan would see the ECB buy bundled packages of SME loans.
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