The European Central Bank is expected to stay on hold at its policy meeting, scheduled on Thursday since certain comprehensive measures that were ruled out in March, are still waiting to be implemented. Against such a backdrop, the Central Bank is most unlikely to act to drop rates any further.
Further, the inclusion of corporate bonds to the asset purchase program and the LTROs are likely to occur next month, while the increase in the quantum of the QE program took effect last month, DBS reported. Further, CPI-led inflation in April and May unemployment rate will probably reinforce that inflation will likely remain on the downside with household sector befits recovering from a sharp turn in the jobs market.
In the meantime, Eurozone’s apex bank predicted that May inflation is likely to fall marginally lower by -0.1 percent on year, compared to -0.2 percent in April, with core inflation modestly moving up. April unemployment rate is seen at 10.2 percent, a shade below 10.3 percent month before.
"Brexit risks will also warrant attention after the BoE outlined a cautious approach towards the impending event risk," DBS said in a research report.
Meanwhile, attention is likely to concentrate over quarterly economic forecasts, especially inflation which has been revised quite till now. GDP figures may also witness a revision after an upbeat first quarter growth figure. However, with the latest rebound in global commodity prices, chances are that estimates will be held steady or raised only marginally.