Keeping rates on hold will be the easy part of the European Central Bank meeting on Thursday: the harder job will be chief Mario Draghi having to balance talking up euro zone recovery and talking down market rates.
Recent economic data has come in relatively strong, largely validating the ECB’s main scenario of a gradual recovery taking hold in the second half of this year and gathering pace in 2014.
However, a rise in forward market interest rates has already caused consternation among the bank’s policymakers. Draghi cautioned last month that market expectations of an interest rate rise are “unwarranted”.
That verbal intervention did little good, and market rates have continued to rise despite the warning and the ECB’s July assurance that it would keep its policy rates at current or lower levels for an extended period of time.
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