ECB likely to keep monetary policy on hold in September, economy to expand 2.1 pct in 2017

The European Central Bank is set to meet on Thursday to discuss likely alterations to its bond-buying program. Earlier in 2017, ECB policymakers’ hawkish comments led to a brief sell-off in European sovereign bonds, leading some to believe that a tighter monetary policy was just around the corner, noted Wells Fargo in a research report.

The euro area recovery has become increasingly self-sustaining in the midst of stable employment gains and rebounding business sentiment. In spite of the firming growth environment, core inflation has been listless around 1 percent for the last two years. According to Wells Fargo, the euro area economy is expected to expand 2.1 percent this year, which would be the strongest annual average growth rate since 2007.

“We believe improving economic conditions and gradually accelerating prices will spur the ECB to continue tapering its bond purchases in the months ahead and cease buying bonds altogether in the first half of next year”, added Wells Fargo.

At 22:00 GMT the FxWirePro's Hourly Strength Index of Euro was neutral at 2.10501, while the FxWirePro's Hourly Strength Index of US Dollar was highly bearish at -102.672. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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