n the view of the analysts at the Royal Bank of Canada (RBC), the European Central Bank (ECB) will likely remain data dependent while leaving the interest rates lower through the end of this year.
“Having changed its forward guidance at its last meeting, the ECB now expects interest rates to remain at their current level 'through the end of 2019' compared to 'through the summer of 2019' previously and announced a fresh round of bank liquidity measures; we expect the ECB to remain on hold this month.
Details of the new TLTROs, including the exact rate attached to them and the incentive structure to encourage bank lending, are unlikely to be announced until the June meeting. For the time being, the ECB will be watching the incoming data as it attempts to decipher how much longer the euro area growth slowdown is likely to last and whether it worsens.
Key for the ECB in coming months in that regard will be what happens to domestic demand, in particular, consumption and investment, and whether the weaker external environment that it now taken as a given spills over into consumer sentiment and business investment decisions.”