ECB set to hold steady this week amid slower growth

The European Central Bank (ECB) is set to hold steady this week as recent economic indicators point towards a slowdown of the euro zone economy. Speculation is also rising that the ECB is considering pushing the end of its quantitative easing (QE) program further into the future.

"We expect no policy actions and a broadly unchanged language at the ECB's policy meeting (Thursday)," Dirk Schumacher, research analyst at Natixis, said in a note last week. "We expect, however, a hint for a decision on the asset purchase program (APP) at the June meeting."

That would be the best possible outcome as markets are longing for more information about the central bank's exit strategy from its ultra-loose monetary policy. Until now, ECB President Mario Draghi always reiterated that the QE would last until September this year, at least.

Much will depend on how the ECB assesses the recent slowdown in the euro zone. At the International Monetary Fund meetings in Washington last week, Draghi maintained his optimism, stating: "Notwithstanding the latest economic indicators, which suggest that the growth cycle may have peaked, the growth momentum is expected to continue."

2017 was the strongest year for the euro zone economy in a decade but the beginning of the year was dominated by a slump in output and confidence that could threaten the inflation outlook of the ECB.

The question is whether this slowdown is only of a temporary nature because of bad weather and the serious flu season this year, or whether global uncertainties, such as potential trade conflicts, have a more serious bearing on economic growth.