The ECB is unlikely to make any major decisions at its April meeting after taking a big step towards phasing out unconventional policy support in March. While the Bank will argue that measures to support the banking sector are now not needed as much as they were, it will stress that liquidity provision will be reduced only gradually. What’s more, with aggressive fiscal tightening firmly on the agenda, its tone regarding the macroeconomic outlook is likely to be downbeat. This suggests that conventional monetary policy support will be maintained for much longer than markets expect.
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