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Koefoed: Why Draghi will be cautiously optimistic on the economy

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Saxo's Mads Koefoed expects the ECB President, Mario Draghi, to paint a more upbeat picture of the Eurozone economy when it meets later this Wednesday. He notes that inflation has picked up by more than expected, in figures released on Tuesday. He also believes that economic output for the second quarter will produce another strong print. However, he says Draghi will be cautiously optimistic.

New economic projections on growth and inflation will be produced by the ECB. Although Koefoed expects them to be similar to those of March, he thinks there will be an upward revision to both the oil price and inflation paths. He says there will be no change to the QE programme which will continue to run until at least September 2016.

With the benchmark interest rate at 0.05% and the deposit rate at -0.2%, could the ECB decide to go lower still? Mads doesn't think so although he believes they could signal a future cut.