After disappointing markets in December, we expect the ECB to indicate at its forthcoming meeting that the door is still open to bolder policy support. The Bank is unlikely to alter policy for now given the firm tone of recent survey data and the damage that such a change of heart might do to its credibility. However, if growth slows in the coming months and inflation expectations weaken as we expect, it may not be long before the Bank concedes that it must do more. We see it increasing the pace of monthly asset purchases and perhaps cutting interest rates in Q2.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services