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