Overnight we heard from the IMF’s Christine Lagarde, calling on the ECB to ease policy further as low inflation in the EZ causes increasing concern. She is not alone, with plenty of other analysts and commentators calling for some sort of increased stimulus.
It seems to me however that the ECB will not act until the signals are exceptionally strong. Despite the reportedly low inflation, retail sales across the region remain reasonably strong which suggests that the consumer isn’t overly worried that prices are set to continue falling.
I’m not willing to take any big risks based on what the ECB might or might not do/say, but if we get a sharp sell off in the EUR ahead of the meeting then I might be persuaded to put on a small wager that the ECB will do absolutely nothing.