ECB Monetary Policy Meeting Accounts Preview – March 2019

No Surprises Expected from the ECB Minutes

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The European Central Bank will be releasing its monetary policy meeting accounts today. The minutes cover the monetary policy meeting held in early March. Back then, policymakers in the eurozone decided to leave all key interest rates unchanged.

The central bank announced that it would release a fresh round of stimulus packaged for banks while pledging to keep interest rates unchanged. The fresh round of financing, also known as the Targeted Long Term Operations is aimed at raising liquidity in the markets.

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The ECB also lowered its growth forecasts at the meeting in March. Cutting forecasts by 0.6 percentage points, the ECB said that it expects eurozone’s economy to grow at a pace of just 1.1%.

This was a sharp revision comparing to the estimates from the December 2018 monetary policy meeting.

Today’s meeting accounts will cover the minutes of the ECB meeting and will reveal the discussions policymakers have had.

It was in the December monetary policy meeting that officials discussed the TLTRO program. The discussions started after growth in the eurozone began to slow.

The TLTRO program was announced three months later at the March meeting.

Draghi’s Comments from ECB Watchers Conference

Today’s meeting minutes are unlikely to spring any surprises given the fact that the ECB’s press conference and policy decisions in March were broadly in line with market expectations.

It is highly improbable that the central bank will turn more dovish than this.

Recently, speaking at the ECB watchers event, Draghi said that the central bank should soften the impact of negative rates.

Interest rates in the eurozone have remained in the negative territory and raise the same concerns as in Japan. The long term use of negative rates erodes the profitability and margins for banks.

This mostly comes as the margins for the financial institutions continue to decline due to negative rates

The central bank chief stopped short of elaborating on the measures that the central bank would take. He also said that there was a delay in the ECB achieving its inflation goal. However, he did rule out the prospects of the ECB not achieving its inflation mandate.

The euro is unlikely to react much to the release of the meeting minutes today. However, if the minutes reveal a more dovish tinge than what the markets expect, we could see the sentiment turning sour in the euro currency.

US Weekly Jobless Claims Forecast to Rise

Following the release of the ECB’s monetary policy meeting accounts, the NY trading session will see the release of the weekly unemployment claims.

The unemployment claims are forecast to rise from 211k to 215k for the week ending March 30th. In the week before, unemployment claims fell to 211k from a revised print of 216k. The data indicates that the US labor markets remain on solid ground.

US Initial Jobles Claims
US Initial Jobles Claims, March 23

The weekly claims report comes at a time when investors are concerned about the weak reading in the official payrolls report in February. The US economy added the lowest number of jobs during the period. Investor concerns rose on account of this, with speculation that the momentum in growth could stall.

As it stands, the four-week moving average of the claims fell to 217,250 for the week ending March 23. With the current forecasts, the weekly claims for the March 30th week could remain within the average trend.

While the unemployment claims report is unlikely to impact the USD much, the data does come during a busy week where investors are eagerly waiting for this Friday’s payrolls report to come out.

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