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In the most important economic event for the week ahead, the Governing Council of the European Central Bank (ECB) is going to gather on Thursday and deliberate on the current economic situation in the bloc. In addition to that, the Council is expected to announce its adjusted monetary projections for the next quarter and potentially change the interest rate on the main refinancing operations. The prevailing market forecasts, however, do not expect a likely change in the interest rate, which is likely to remain unchanged at 0,00 per cent.
In its previous monetary policy gathering from the 25th of July, the Governing Council commented on the measured subdued inflationary pressures, which were said to be diverging from the central bank's key target - a symmetric inflation rate.
“The Governing Council also underlined the need for a highly accommodative stance of monetary policy for a prolonged period of time, as inflation rates, both realised and projected, have been persistently below levels that are in line with its aim. Accordingly, if the medium-term inflation outlook continues to fall short of its aim, the Governing Council is determined to act, in line with its commitment to symmetry in the inflation aim.” [source]
Little has changed since then, and the overall inflation rate continues to be raising investors’ concerns, as it remains unchanged at 1 per cent on a year to year basis.
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Overall, the economic situation in the European area continues to suffer from the global downside risks to growth, which stem from the prolonged uncertainty to international trade resulting from the impasse in the negotiations between China and the US. Because of this registered trade uncertainty globally, the inflationary pressures have been impeded by low levels of spending and reinvesting in the economy, exhibited by the poorly performing consumer confidence index.
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Meanwhile, the EURUSD currency pair remains to trade in a bearish channel, and the price has been contained by a strong resistance level at 1.10690.
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