Macron's victory doesn't mean Draghi will start tightening the policy

Political uncertainty has begun to dissipate in the euro zone after the Dutch general election and, more recently, the first round of the French presidential race. However, European politics are still a concern and it is too early for the central bank to consider raising rates.
There is no denying that the French election result has given renewed impetus to speculation that the ECB might dial back quantitative easing earlier than planned, or might hike rates sooner than markets had been pricing in.

The European Central Bank is meeting Thursday but expectations are that it will not announce any policy changes. "Even assuming Macron secures his victory in the second round, it is also important that he will garner sufficient support in parliament.

Carsten Brzeski, chief economist at ING, said the ECB is "highly unlikely" to do anything in between the first and second rounds of the French election.

Even as the political landscape becomes a lot clearer and economic data strengthens, analysts don't expect too much from President Mario Draghi when he addresses the press, but there may be small changes in the language he uses.

Source: Bloomberg

Trader I. Ivanov

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