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The European Central Bank seems to keep its policy unchanged on Thursday, but most likely admits that growth prospects are worsening.
The ECB will confirm that its asset purchase program will end this year, but will also note that the uncertainty in the eurozone is intensifying against the background of political problems.
Such a message is likely to support expectations regarding future rates. This week, the EU took an unprecedented step, refusing to agree on the Italian budget, so an escalation of the political struggle between Rome and Brussels will also be on the agenda. The head of the ECB, Mario Draghi, the Italian himself, can again state that no EU member state can count on his help, especially those whose problems are caused by the violation of EU rules.
The regulator fears that investors may interpret a change in risk assessment as a sign of an inevitable change in monetary policy, and the ECB is not ready for this. Thus, even if growth prospects really deteriorate, the ECB may still not focus on risks in order to prevent a major shift in market participants' expectations.
So, we will wait for the press conference of Mario Draghi. Most economists are unanimous in their opinion that the rates will remain unchanged.
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