No big surprises at today’s meeting, as the market did not really expect a reduction in Pandemic Emergency Purchase Program (PEPP) purchases like a few weeks ago “, comments Adrian Hilton, Managing Director global rates and currencies and emerging debt at Columbia Threadneedle Investments.
“But Ms. Lagarde seemed to describe a Board of Governors which only very cautiously increases its optimism on the European economic outlook,” continues the professional.
According to him, by modifying GDP growth and inflation projections slightly upwards for 2021 and 2022, but leaving the outlook for 2023 unchanged, the ECB has indicated that it does not yet see the foundations for a recovery. sustained long-term growth, especially if the labor market remains very sluggish.
“We know the central bank is sensitive to a potential tightening of funding conditions through higher market rates. It is possible that the rise in bund yields last month, when 10-year bonds briefly threatened to trade with a positive return, put the nerves of the ECB in turmoil and make it cautious about a premature withdrawal of political support “, concludes Adrian Hilton.