ECB: Strengthening growth but subdued inflation – RBC CM

Today’s ECB meeting again takes place against a backdrop of strengthening growth but subdued inflation of the Eurozone explains analysis team at RBC Capital Markets. 

Key Quotes

“Markets are focusing on a few things: (1) what will happen to the forward guidance; and (2) what will happen to the economic and inflation assessment (though the latter was given away by a leaked story yesterday indicating that headline inflation would be downgraded while core would be little changed).”

“We still see some change to the forward guidance given the expected upgrade to the economic assessment, but our rates team look for it to be at the lower end of expectations (dropping ‘or lower’ when describing future rates but not going further). We look for Draghi to ram home the message that the ECB is still far from meeting its mandate on inflation. We are still holding onto our tactical EUR/CAD short.”