The European Central Bank is set to keep monetary policy on hold on Thursday as it casts a cautious eye ahead to high-risk elections in the Netherlands and France during an upsurge in populist, anti-establishment sentiment.
Although economic growth and inflation are both picking up, the ECB is expected to resist calls to tighten policy, pointing to political risks, weak underlying price growth and a still fragile recovery nearly a decade after the bloc’s economic woes began.
For once, the outlook is improving. Economic sentiment is at a six-year high, trade is rebounding, services and manufacturing output are rising, and unemployment is at its lowest since 2009, suggesting the economy is in its best shape in all that time.
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