LONDON, February 2 (FinanceEnquiry.com) - Analyst Elga Bartsch at Morgan Stanley expects the ECB to stay on hold at its policy-meeting due on February 9.

In a research note published yesterday, analyst Bartsch mentions that the Council’s acknowledgement of “tentative signs of stabilization” would go against the rate cut at the February meeting. However, ECB is expected to stay put in February, and if this assumption goes right then some risks to the forecast of a further 50bp of rate cuts Q1 would emerge. In addition, Council is to make sharp cuts in the main refinancing rate in March, reflecting the weakening economy and the inflation outlook.

The analyst does not expect any significant changes in the introductory statement ahead of new staff projections released in March and February’s three-year LTRO, given the supportive dataflow for the ECB’s assessment of the situation in the euro area. Moreover, the controversy on the Governing Council on Sovereign debt purchases would deepen, and consequently the risk that ECB could curb its asset purchases to private sector assets would increase.