On Thursday, the European Central Bank is likely to maintain the wait-and-see mode adopted in September and buy time to collect data ahead of the December meeting and the new staff projections.
Nevertheless, the risks to the European economic outlook and disparities across countries are rising again with a strong increase in new infections and renewed containment measures. In addition, latest inflation data have been disappointed.
Hence, the central bank should signal that it stands ready to provide additional easing if the crisis worsens. We think the ECB will let all the options opened until the next meeting. We also expect Mrs. C. Lagarde to emphasize the importance of the coordination between fiscal and monetary policy and push government to do more to lift the euro area economy.
All in all, this meeting shouldn’t have material impact on financial markets.
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