Today promises to be eventful for markets, with key developments due in Europe and the US. The most influential, potentially, is the ECB policy meeting, with a few economists predicting a cut in the refinancing rate to a record low 0.25%, but most seeing no change after a close decision. The ECB discussed a rate cut at its recent meetings and its forward guidance underlines its current dovish stance. A rate cut today will not be a major surprise, but, on balance, we believe the ECB will choose to wait for more data and analysis.
The post meeting press conference as usual will be the focus point as “Super Mario” will explain the thinking behind the decision. In contrast to the ECB meeting, the outcome of today’s Bank of England meeting should be a major snoozeville with policy expected to be left on hold and a press statement unlikely. The MPC will have to hand its latest quarterly economic forecasts, but markets will have to wait until next week for the publication of the November Inflation Report.