ECB set to stay dovish this week, even as political risks ease - SocGen

The research team at Societe Generale, expects the ECB to remain dovish even as political uncertainty on France has been lifted by the result of the second round of the presidential election.

Key Quotes

“The ECB has pointed to political risks as one factor justifying a still very accommodative monetary policy stance. Given that the bulk of the political uncertainty on France has been lifted by the result of the second round of the presidential election, we look for a gradual change in communication in June (risks seen as balanced and possibly higher 2019 inflation). Looking ahead, we expect the firm dynamics of the underlying economy and core inflation heading above 1% to allow the ECB to taper again in September.”