FRANKFURT: Expectations are high that the European Central Bank will hint that it is heading for the exit from its easy-money policy when governors meet in Estonian capital Tallinn on Thursday.
Most analysts predict the bank’s 60-billion-euro monthly bond purchases will continue and interest rates will remain at historic lows.
But they believe policymakers will begin laying the groundwork for an announcement later this year about plans to wind down bond-buying, by offering a sunnier economic outlook for the 19-nation euro zone.
“The ECB governing council needs to take no major policy decision beyond tweaking its guidance a little to keep up with the eurozone’s broad-based and resilient economic recovery,” said economist Holger Schmieding of Berenberg bank.
Bond-buying and low interest rates were introduced at a time when the ECB feared the threat of deflation — or steadily decreasing prices the undermine economic activity.
By pumping cash through the financial system the bank believes it has stimulated growth and pushed inflation back towards its target of just below 2.0 per cent. — AFP
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