ECB KEEPS THE SUSPENSE

Edito There is no doubt that the ECB meeting on Thursday 7 March will be next week’s unmissable highlight. While many observers expect an announcement of a new TLTRO, it is in our opinion more likely that President Draghi will let the markets wait until June, though we expect a clear signal that another funding operation will eventually come. On the other hand, the ECB’s forward guidance is likely to be changed to signify that interest rates should remain at the current level until the end of the year – and not until this summer. The ECB staff’s new growth projections will also be announced and will probably be revised downwards, given the persistence of geopolitical risks. The main reason is obviously still the Brexit saga, but there should nevertheless be some respite on this issue until the next vote in Westminster on 12 March.