The European Central Bank holds its first meeting of the year on Thursday as concern grows about weak economic growth at home and risks abroad from global trade tensions and Brexit.
Having ended its stimulus scheme in December, ECB chief Mario Draghi is likely to be pressed on how the central bank will address further economic weakness.
Here are some of the key questions on the radar for markets.
1. Will the ECB change its assessment of the risks facing the economy?
A string of disappointing data, notably from powerhouse economy Germany, suggests a slowing of growth momentum is perhaps deeper than anticipated.
2. What about the guidance that rates will stay on hold through the summer. Could that change?
No immediate change is expected this week, but the rate guidance is clearly in focus given weak data and concern about the impact of developments outside the bloc such as a Chinese slowdown and Brexit. A government shutdown could also hurt the U.S. economy, adding to global growth worries.
3. When does the ECB expect inflation to move higher?
A dip in euro zone inflation and growth was anticipated so it is not enough to unravel expectations of a rate hike, Sabine Lautenschlaeger, the most prominent hawk on the ECB Executive Board, said in an interview last week.
4. Has the weak data encouraged the ECB to start discussing new multi-year loans to banks?
Minutes from the ECB’s last meeting showed policymakers are likely to debate new multi-year loans to banks, a potent stimulus tool, in coming months as they navigate a “fragile and fluid” global context.
5. Is the ECB prepared for a no-deal Brexit?
Britain’s March 29 deadline for leaving the European Union is fast approaching, but Prime Minister Theresa May’s exit deal has just suffered a resounding defeat in parliament.
“Draghi may be asked about what the ECB would do in the event of a no deal,” said Frederik Ducrozet, a strategistat Pictet Wealth Management in Geneva.
“...The path of least resistance would be to use the forward guidance to not hike rates this year at the minimum.”
Reference: Reuters
Read More: https://www.reuters.com/
Thai
Eng