"An important part of the package will be the accompanying words. If he says that the council has given a first installment of measures and will be ready to do more if needed, this could give more weight to the easing package."
-Francesco Papadia, a former director general of market operations at the ECB
It will be several painful days for the shared currency, as EU election results can affect ECB's decision making process, while central bank's top brass have already decamped to Sintra to brainstorm on new ways to use monetary policy. There has been a lot of jawboning in the recent months, as ECB's President has set expectations for a fresh stimulus at a record high. It seems that what could happen at meeting in the small town near Lisbon will have a direct impact on ECB's decision on June 5. A vast majority of analysts believe the ECB will cut its main refinancing rate by either 10 or 15 basis points and will lower its deposit rate into negative territory, entering the uncharted zone. While the central bank can unveil measure to boost lending as well, policymakers also hope the novelty will help to weaken the Euro. As a result, it will lift inflation, making imports more expensive and spurring bank to lend money to their counterparts in the periphery.
In the meantime, bonds of some struggling Europe's economies sold off last weeks as investors were worried about the fact there is rising support for anti-EU parties. Further gains in support for far-right parties will make it even more difficult for European authorities to cope with the ongoing crisis in the 18-nation's bloc. While some indicators are bedding in, others, like inflation are still well below the target level.
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