The European Central Bank is set to meet tomorrow for its interest rate decision. According to a DNB Markets research report, the ECB is likely to keep interest rates, its asset purchase program and forward guidance on hold tomorrow.
During its last meeting, the central bank made adjustments to its forward guidance and introduced new liquidity measures (TLTRO-III). While there have been talks of the central bank introducing a tiered interest rate system, any such action is believed to be premature, said DNB Markets.
“However, in the long-term, as we expect rates to remain on hold until 2021, we believe it is highly likely that the ECB will adopt tiered interest rates, allowing banks to pay less on parts of their excess reserves”, added DNB Markets.
Overall, with inflation being unexpectedly negative in March and the euro area data having softened further, Mario Draghi is expected to keep a dovish tone, guiding interest rate expectations down, rather than up.
At 18:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 10.2911 while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -46.6383 more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex
