Sandra Holdsworth, Head of Rates UK at Aegon Asset Management, comments:
“The ECB meets on Thursday to discuss monetary policy. They have already signalled that they are winding down the various QE programmes and markets will be watching carefully for any change in the timetable and any indication that interest rates will rise.
“The economic forecasts will certainly confirm the need for tighter policy. The ECB staff will revise inflation up over the next two years and forecasts for economic growth are likely to remain robust at least for 2022. The forecasts, however, have already been superseded by another rise in energy and other commodity prices and widespread alarm and concern regarding the Russian invasion of Ukraine. The ECB will therefore have to balance this continued deterioration in the outlook for inflation with a potential hit to economic growth.
“We expect the ECB to bring forward the end of their QE programmes (PEPP in March and APP in June) but to remain non-committal regarding rate rises until later in the year.”