On Thursday, all financial markets participants will keep a watchful eye on the European Central Bank (ECB) monetary policy meeting and interest rate decision. This day could be a historical moment for the bank since it is expected to bring its stimulus plan to an end by 2.6 Billion Euros. However, financial markets are watching how ECB will protect the bloc in 2019 from a serve downturn in the shade of Brexit and Italy’s turmoil.
Due to weak economic data in the Eurozone, the rate-hike expectations for the year 2019 scaled back in recent weeks, as 80% of investors were expecting the interest rate to increase by 10 basis points, down from 100%.
On June 2018, the European Central Bank decided to keep the interest rate on hold through next year, and the recent comments from policymakers signed that this would be the case even as concerns about the economic outlook grows. “They may say they will raise rates at the end of the summer or end of 2019, but a lot can happen in that time,” said Guy Foster, head of research at wealth management firm Brewin Dolphin.
In the inflation pace, the annual European Consumer Price Index (CPI) dropped by 2.2 to 2.0% around the central bank's target, but the core CPI dropped by 0.1% reaching 1% in November due to the slowback in energy, food and the increase in core good prices.
Due to the high levels of volatility, we recommend you to maintain sufficient margins.