Wednesday preview: All eyes on Draghi as ECB announces policy decision
With no surprises expected from the European Central Bank (ECB) on Wednesday, the market is likely to zone in on President Mario Draghi's press conference.
Analysts predict the ECB will keep all its key rates unchanged, holding the refinancing rate at 0.05%, the deposit facility at -0.20% and the marginal lending facility at 0.3%.
Draghi’s press conference shortly after the announcement will be closely followed for word on how the quantitative easing programme has been progressing.
The QE package was introduced in March to help bring inflation back towards the ECB’s target of just below 2%.
The Eurozone returned to inflation in May, Eurostat revealed in a preliminary estimate on Tuesday. The consumer price index rose 0.3% year-on-year last month compared to 0% in April and analysts’ expectations for a gain of 0.2%.
“While the headline inflation increase that has unfolded since the beginning of the year is certainly meaningful, the driving forces behind it still look too fragile to justify any hawkish rhetoric from the ECB, in our view,” said Barclays Research analysts.
“That said, based on the details available so far (more on this below), the May print looks interesting from a bottom-up viewpoint and deserves a close look which will only be possible when the Eurostat statistics office publishes the final breakdown data on 17 June.”
The focus now turns to Draghi’s interpretation of the data on Wednesday.
Wednesday’s agenda also sees the release of data on Eurozone retail sales, OECD’s economic outlook, UK Nationwide house prices, and a batch of service PMIs in the Eurozone, China, Japan, the UK and the US.
Analysts will also be watching out for the US ADP private payrolls report ahead of the official non-farm payrolls figures on Friday.
Wednesday 03 June
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INTERNATIONAL ECONOMIC ANNOUNCEMENTS
Balance of Trade (US) (13:30)
Beige Book Fed Survey (US) (19:00)
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