ECB Meeting Foresight: Is It Still Silent?

　　 Federal Reserve President Yellen (Janet Yellen) testify on the economic prospects of the Joint Economic Committee of the United States Congress, which is largely consistent with the previous remarks. She said that the industry market had "considerable scale" idle labor and low inflation, which provided the basis for the highly loose monetary policy. The stagnation of GDP growth in the first quarter mainly reflected the temporary effects of weather and so on. After the severe cold winter, a number of indicators indicated that expenditure and output rebounded. This year, the US economy will expand faster than last year, the unemployment rate will gradually decline, inflation will begin to rise to 2%, and stock and real estate values are still at the normal level of history.

But she also pointed out that the weakness of the US housing market may continue, which is a major risk facing the future and will remain "closely watched". Although the employment market in the United States has improved significantly, it is far from satisfactory, and the low labor remuneration shows that there is a large number of idle labor force in the job market.

Russian President Putin resolved the market risk aversion by addressing the crisis in Ukraine and the chairman of the OSCE. Putin first softened his stance on the Ukraine issue. He said he would seek a solution to the crisis by the OSCE and Russia's position has also been made public. The two sides will strive to analyze the situation in order to find a common outcome plan.

The most crucial thing in May 8th is the ECB interest rate resolution at 7:45 in the evening and the speech of the European central bank governor Delaki later 8:30. Let's see what news will be affected recently. Draghi Keynote:

Inflation rose from 0.5% to 0.7% in April, and core inflation rose from 0.7% to 1%.

EUR / dollar Appreciation of about 0.5%, still close to 1.40.

Spanish 10 year bond yields fell below 3%, the lowest level in the euro era.

Interbank lending rates fluctuate frequently. The euro interbank overnight rate rose to 0.45% in April 29th, higher than the ECB benchmark interest rate. Since then, interest rates have fallen, but there are still fluctuations.

Eurozone countries' economic data continue to go up, including peripheral countries.

In view of this, I think it is difficult for the ECB President Delaki to strike a balance. On the one hand, it is expected that Delaki will recognize that the growth has been better and the bond spreads have continued to narrow. On the other hand, I have not understood Delaki's heart rate and high exchange rate for a long time. He can do his best to weaken the optimism so as to avoid building up pressure on the euro or interbank borrowing costs. Draghi will continue to be cautious. Given the recent weakness of the US dollar, if he did not inject new liquidity into the euro area, the euro would probably continue to rise. Although I think the ECB cut interest rates at this meeting, the possibility of negative interest rates and QE is very small. It may take all actions in June, but now is the best time to take measures, because the market will be very surprised. Needless to say, if there is an accident, the euro will fall sharply.