The European Central Bank (ECB) is holding a meeting today on the issue of monetary policy and the markets are very tense in anticipation of the announcement of the decision on the incentive program.

Why? Because at the conference in Portugal last July, the President of the ECB, Mario Draghi, unexpectedly took a militant stance on monetary policy issues, hinting at possible changes in the quantitative easing program.

“The economy continues to recover and the permanent political situation will become more stable and the Central Bank will be able to assist in the restoration by making changes to political instruments,” said Draghi.

Since the last meeting on monetary policy in July, the euro rose by almost 2.4% against the US dollar, which added to the key exporting countries in the EU, especially Germany, the strongest economy in the block.

However, Draghi tried to lower his expectations at the last meeting of the ECB, stating that discussions on changes in the current program of quantitative easing would begin only in the autumn.

And this decision was not random. In case of any changes in the monetary policy, the ECB wants to be sure that there is almost complete silence on the political scene.

And that is why, the chance that this month will end without changes in the current policy configuration is very high. Elections will be held in Germany later this month, and despite expectations that the euro will maintain the status quo, the far right is still a risk.

What to expect from Draghi?

It’s easier to say what you should not expect from him. Do not expect to hear news of changes in the interest rate or quantitative easing program.

Instead, pay attention to how he will talk about the future of monetary policy. Will the details of the current configuration be disclosed? Will the euro be mentioned? Is this a hindrance to the regulator. And inflation? Is it permissible to make changes in monetary policy in conditions of low inflation?

Also pay attention to the inflation and growth forecasts for 2019, which are so important for market participants. These reports can have a strong impact on market movement.

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