With concerns about the euro-zone banking sector growing again, markets will be hoping for reassurance that the ECB will continue to provide ample liquidity. At the same time, the ECB is likely to stress that its asset purchases will continue to be fully sterilised and hence do not amount to fullblown quantitative easing (QE). But with eurozone business confidence already weakening in response to the periphery’s troubles, the Bank will maintain a dovish tone. Interest rates will be on hold for a long time to come and we would not rule out a move to full-blown QE in future.
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