Nordea economists explain three plausible scenarios for the outcome of the European Central Bank's monetary policy meeting next week:
"The ECB hikes rates and keeps its tightening bias intact; this would be a hawkish scenario that would likely boost interest rate expectations more durably. We think this is the least likely of the three scenarios."
"The ECB raises rates by another 25bp, but softens its tightening bias to suggest the bar for further hikes has risen; such an outcome would likely boost rate expectations only briefly."
"The ECB leaves rates unchanged while retaining its tightening bias; we think such an outcome would put some downward pressure on interest rate expectations, even if it would be considered a hawkish hold. This is also our baseline scenario."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

EUR/USD meets support near 1.0870 ahead of the Fed
Investors' cautious approach appears to be bolstering the US Dollar ahead of the Federal Reserve's interest rate decision scheduled for later this evening in Europe, while the EUR/USD has fallen back below 1.0900 after reaching its year-to-date highs on Tuesday.

Gold treads water around $3,030, looks at the Fed
Gold alternates gains with losses after reaching a record high near $3,050 earlier today. Traders, in the meantime, await the Federal Reserve's upcoming monetary policy decision and the release of the revised Summary of Economic Projections.

GBP/USD remains side lined near 1.2970 prior to the FOMC event
GBP/USD comes under pressure and slips back to the 1.2970 region following Tuesday's breakout of the key 1.3000 hurdle in a context of renewed strength in the Greenback ahead of the Fed's interest rate decision.

Federal Reserve set to keep interest rate unchanged amid US recession fears and Trump tariff concerns
Market participants widely anticipate the US central bank to leave policy settings unchanged for the second consecutive meeting, after cutting the interest rate by 25 basis points (bps) to the 4.25%-4.5% range in December.

Tariff wars are stories that usually end badly
In a 1933 article on national self-sufficiency1, British economist John Maynard Keynes advised “those who seek to disembarrass a country from its entanglements” to be “very slow and wary” and illustrated his point with the following image: “It should not be a matter of tearing up roots but of slowly training a plant to grow in a different direction”.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.