Wait-and-see mode in April before the challenging June meeting

16 April 2021

We expect the European Central Bank (ECB) to confirm the current monetary policy course during the April 22 council.

The ECB will likely confirm the measures taken in March to accelerate the purchase pace under the Pandemic Emergency Purchase Programme (PEPP) knowing that this pace will be reviewed in June with the updated economic forecasts. Financial conditions have not tightened since the previous meeting, but the general council will keep a close eye on the bank lending survey that will be published on April 20th. 

Christine Lagarde will keep a very accommodative tone because of the subdued medium-term outlook for inflation despite rising near-term pressures. To keep a broad consensus within the board, she is likely to communicate strongly on the flexibility of the PEPP if financial conditions change significantly in the near future. 

On the near-term economic outlook, the general council will probably maintain a cautious tone because of high COVID-19 infection rates and the associated lockdowns in various European countries. Looking ahead, the ECB might have a more optimistic view as a result of better economic indicators, the ongoing vaccination campaigns and the brighter international environment. 

As usual, President Lagarde is expected to highlight the key role of the Next Generation EU package and the importance of it becoming operational without any delay.

Overall, we do not think this meeting will have a significant impact of financials markets.


Disclaimer
This commentary is intended for non-professional investors within the meaning of MiFID II. It is provided for informational and educational purposes only and is not intended to serve as a forecast, research product or investment advice and should not be construed as such. It may not constitute investment advice or an offer, invitation or recommendation to invest in particular investments or to adopt any investment strategy. Past performance is not indicative of future performance. The opinions expressed by La Française Group are based on current market conditions and are subject to change without notice. These opinions may differ from those of other investment professionals. Published by La Française AM Finance Services, head office located at 128 boulevard Raspail, 75006 Paris, France, a company regulated by the Autorité de Contrôle Prudentiel as an investment services provider, no. 18673 X, a subsidiary of La Française. La Française Asset Management was approved by the AMF under no. GP97076 on 1 July 1997.

 

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