Markets watching for shifts in monetary policy

The European Central Bank and the Bank of England’s Monetary Policy Committee meet this week to review monetary policy operations in their respective economies.

Interest rates are expected to be kept at historically low levels in Britain and the eurozone but the markets will still watch for signs that the ECB and the Monetary Policy Committee are prepared to do more to support activity in both areas.

Though there have been some uplifting economic indicators in recent weeks, the risks remain firmly to the downside. There will be plenty of interest in what the ECB president has to say about the crisis in the euro area but it would be surprising if he were prepared to indicate a change in the ECB’s overall stance of non-standard monetary policy measures. Prospects for more immediate stimulatory measures are greater in Britain, however, with the markets anticipating an announcement on Thursday.