The renewed deterioration in some indicators of economic activity and fears about the political situation in Italy should prompt the ECB to strike a softer tone after its next meeting. President Draghi might hint at a possible future interest rate cut or support for struggling banks through more LTROs. However, he is likely to stress that OMTs will not be implemented for any country that does not apply for an ESM bail-out and accept the associated fiscal austerity – even if the country in need is as big and systemically crucial as Italy.
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