European Economics

ECB Watch

1 March, 2018

Weak inflation supports patient, prudent approach

With the economy still performing well and the euro off the boil, we expect the ECB to remove the loosening bias from its forward guidance when it meets on 8th March. But the persistent weakness of inflation will have convinced the Bank to take a cautious approach to policy normalisation. We think that asset purchases will be tapered after September and not stopped abruptly. And interest rate hikes still seem like a pretty distant prospect.

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