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News Link • European Union

Our Ultimate Guide To The Big ECB Decision Tomorrow

• http://www.businessinsider.com, Simone Foxman
 The European Central Bank will make a highly anticipated monetary policy decision tomorrow, gaining the most attention of any such meeting since December.

Interbank funding conditions are deteriorating in Spain and analysts are still concerned that a June 17 election in Greece will result in a suspension of bailout funds, yet more and more investors have begun to buzz about support from the world's central banks.

Opinions about what might happen tomorrow remain highly divided. 48 out of the 60 forecasts compiled by Bloomberg predicted that the ECB would hold rates steady at 1.00 percent (with the rest predicting a 25 or 50 bps cut). That said, many of those forecasts were made late last week, before G7 central bankers and finance ministers held an emergency conference call supposedly to discuss the crisis.

There are strong economic reasons to believe that a rate cut might be in the works. Inflation is falling closer to the ECB's under two percent target, growth of M3 money supply is falling sharply, and manufacturing data just keeps getting worse for most of the euro area.

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