-Yves Mersch, ECB Governing Council member
As it was expected, the most traded currency pair remained around 1.37-mark ahead of the FOMC meeting. With less and less time left before June's meeting, central bank's officials are starting to give clues on the upcoming event. First, ECB's Governing Council member Yves Mersch claimed the possibility of June action has grown markedly in the recent weeks. While he stated the ECB does not see any risks of deflation in the 18-nation's bloc's economy, policymakers should be prepared for residual risks of deflation. His comments echoes with other top ECB's members' speeches, suggesting the ECB will finally pull the trigger next month. The current market consensus stands for a cut of the benchmark refinancing rate to 0.15%. One of Mersch's colleagues, Mr. Nowotny, tried to calm down markets by saying the revision of the deposit rate is unlikely to happen. His words were supported by an insider report in one of the German newspapers. By saying "a central bank has enough means to end inflation at any time", Nowotny only fuelled speculations for the U.S.-style quantitative easing. It is getting more and more likely that we may observe a massive sell-off of the single currency in the beginning of June.
Separately, four people familiar with the matter said the ECB is considering holding meetings only every six weeks instead of monthly gathering.
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