ECB Meeting Today

The main economic event today is the ECB policy announcement at 12:45BST, followed by the press conference with President Mario Draghi at 13:30BST.
No changes to interest rates or the asset purchase programme (€30bn/month) are expected.

At the last meeting in March, the ECB removed its easing bias on asset purchases but kept the end date of the programme open (“until the end of September or beyond”).
On interest rates, they are expected to remain at present levels for an extended period, and well past the horizon of our net asset purchases.

We expect that it is too early for the ECB’s forward guidance to be adjusted again today, but markets will be watching Mr. Draghi’s comments very closely. We anticipate the President will be cautious about signalling less stimulus at the present time given that demand in the economy looks to have slowed in Q1 and underlying inflation remains relatively subdued.

Our central view is that the ECB will announce in July the path to end its asset purchase programme by the year-end, with a change to its forward guidance on interest rates in September. Together, these will provide greater clarity on the potential timing of the first hike (we expect that to be in mid-2019).

In the UK, the CBI distributive trades survey this morning and GfK consumer confidence in the early hours of Friday will provide an early snapshot of the household sector for April.

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