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#1 04-06-2019 11:46:33

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ECB: dovish meeting expected in light of many downside risks

ECB: dovish meeting expected in light of many downside risks weighing on the economy (BBVA)

The June ECB meeting will take place on Thursday, and should be considered the most important macroeconomic event of this week.

On this occasion, BBVA bank's forecasts are below, with expectations pointing to a dovish meeting:

"At the June meeting, the ECB will likely maintain its dovish tone and willingness to act if necessary. No changes are expected at this time in terms of future directions.

In addition, the central bank will unveil the final terms of the upcoming "TLTROIII". The cautious tone could be strengthened due to increasing risks caused by global concerns after the escalation of tensions linked to the trade war and Brexit, amidst a context of economic slowdown in the euro area and low inflation expectations.

It should also be mentioned that the minutes of the April meeting confirmed the Dovish tone of recent months, as the ECB acknowledged slower growth momentum, but also considered that recent data had improved, in line with its baseline scenario.

The ECB will likely maintain that risks to growth remain on the downside.

Despite accelerated growth in the euro area in the first quarter of the year, growth has been leaning towards moderation, which explains the prolonged weakness of the industrial sector due to structural factors and the slowdown in global demand.

The ECB is therefore expected to keep its forecasts for 2019 broadly unchanged (GDP: 1.1%; HICP: 1.2%), but the intensification of the trade war and increasing political uncertainty still imply the risk of a downward revision.

On the forex market, it should be noted that a dovish tone from the ECB and its President Mario Draghi is a bearish factor for the EUR/USD pair.

"Anything worth having is worth going for - all the way." - J.R. Ewing



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