ECB to maintain status quo – HSBC

The analysis team at HSBC expects no policy changes at today’s ECB policy meeting and expects it to maintain its forward guidance on interest rates. 

Key Quotes

“After a rollercoaster ride for market rate expectations recently, Mario Draghi and ECB chief economist Peter Praet seem to have quashed expectations of an earlier rate move. There will be no new forecasts published at the ECB meeting on 27 April.  Since the March forecasts, the run of strong soft data in the eurozone has continued but the hard data have not matched this strength.”

“We expect the ECB to stay on hold and reiterate the need to remain cautious, as stressed recently by Mario Draghi. With no policy change expected, the market is likely to focus on forward guidance. Given the underlying inflation outlook, high political uncertainty and the recent comments from Mr Draghi and Mr Praet, we think that forward guidance won't be changed until Q4 2017 and that QE will continue until Q4 2018, with no rate hikes until then.”