Still pretty downbeat despite a strong Q2

The ECB is likely to maintain a very dovish stance at the forthcoming meeting. Admittedly, recent positive data might have led the Bank to revise up its growth forecast for 2010. But the slowdown in global demand is a very worrying sign for the future. As inflationary pressures are totally absent, we see no reason to change our long-held view that official interest rates will be on hold for the foreseeable future. Meanwhile, with peripheral bond yields still rising and many banks in these economies heavily reliant on ECB funds, unconventional policy support is likely to be maintained for quite some time too.