ECB likely to eventually end asset purchases by end-2018, to hike rates in 2019

The euro area economy is expanding at a stable pace; however, the inflation data continues to be benign as seen by the 1.3 percent pace of CPI inflation reported in the month of March.

The European Central Bank had kept its rates on hold during its most recent meeting in March, but the accompanying policy statement removed language about the likelihood of additional quantitative easing measures if the outlook worsens.

The Eurozone economy is growing steadily, but the inflation data there remain benign as evidenced by the 1.3 percent rate of CPI inflation reported in March.

“After having already halved the pace of QE, we look for the ECB to eventually end its current €30 billion per month pace of asset purchases by the end of this year and begin to hike rates at some point in 2019”, noted Wells Fargo in a research report.

The ECB meeting tomorrow will give financial markets an idea of how policymakers’ intentions are evolving against a backdrop of just tepid inflation in Europe.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at -38.4208, while the FxWirePro's Hourly Strength Index of US Dollar was highly bullish at 139.674. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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