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ECB Seen Firmly on Hold, Set to Raise Inflation Forecast

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Keeping interest rates firmly on hold, the European Central Bank will probably raise growth and inflation forecasts on Thursday, a rare positive step even as it emphasises persistent negative risks and a readiness to provide more stimulus.

The ECB is buying assets to the tune of 1.74 trillion euros (£1.35 trillion) to lift growth and boost inflation, which has been stuck in negative territory for months, raising the risk the 19-member currency bloc sinks into a deflation spiral.

With oil prices almost doubling since early January, the ECB will nudge up its inflation projections, breaking a cycle of having to cut forecasts quarter after quarter, and supporting ECB President Mario Draghi’s call for patience with measures already taken.

Reuters

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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
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