Mario Draghi’s habit of springing surprises means that few can say what he’ll do when European Central Bank officials decide on monetary policy today.
Inflation at a four-year low and volatilemarket rates speak for further action by the Governing Council, even after it cut official rates to record lows in November. At the same time, signs of economic improvement and the central bank’s prediction that price gains will gradually return to target suggest the ECB president may prefer to hold fire. That’s the call by 62 of the 66 economists surveyed by Bloomberg News, while 4 predict a cut in the benchmark rate to 0.1 percent from 0.25 percent.
Expectations aren’t always a guide to the actions of Draghi, who has confounded investors with two rate cuts they didn’t see coming and unconventional efforts to keep the euro intact. With the currency bloc’s fragile recovery also threatened by turbulent global markets and the fallout from the U.S. Federal Reserve’s tapering, the chances are rising that he’ll announce another unprecedented measure.
“There is a powerful case for the central bank to do more, and there’s a high chance they will ease policy somehow,” said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. “That may not be through a rate cut.”
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