Entering the European session, all market focus is now focused on the European Central Bank’s (ECB) monetary policy announcement tonight which is expected to continue to keep interest rates unchanged in this meeting.
However, ECB President Christine Lagarde may be faced with the question of how long the European Zone will need support from the current easing.
Some recent economic data suggests a stronger-than-expected economic recovery, and coronavirus embargo measures still being implemented in the European Zone may not require further action by the central bank.
Following that analysts predict, Lagarde will likely tell that the ECB will continue to buy bonds at accelerated rates until June to support financing conditions and help the still -pandemic economy.
The ECB has launched its Pandemic Emergency Purchasing Program, or PEPP to stimulate lending and drive economic recovery. The program was unchanged at its meeting in March, with a total purchase target of € 1.85 trillion until March 2022.
Still, it decided to speed up monthly bond purchases to ease some of the pressure of rising government bond yields. Since then central banks across the EU have spent around € 17 million a week.
The launch of the vaccine in Europe is also likely to help the ECB to boost economic growth prospects. News of the addition of 100 million doses of Pfizer vaccine to the EU, and approval of the use of Johnson & Johnson vaccines, is believed to help boost recovery in the second quarter.
