Words to Watch: How to Detect Shifts by Europe’s Central Bank

A Bullish or Bearish Outlook?

After every meeting, the central bank’s governing council issues a statement giving its view on the current state of the economy in the eurozone.

The last statement, in March, was slightly more bullish than in previous months: “The risks surrounding the euro area growth outlook have become less pronounced,” the statement said, while adding that the risks “remain tilted to the downside.”

Any signal that the central bank is becoming more optimistic about growth among countries using the euro would cause analysts to recalibrate their forecasts of when tapering may begin.

Inflation Worries

A rise in the rate of inflation would put pressure on the central bank to ease its stimulus efforts.

At its last meeting, the bank dismissed an increase in the official eurozone inflation rate, to 2 percent, as a result of higher oil prices rather than an indicator that the economy was heating up.

There are “no signs yet of a convincing upward trend in underlying inflation,” the bank said in March. If the central bank starts to betray concern about accelerating inflation, that would be another reason to expect tapering to begin sooner rather than later.

Deposit Rates

The bank has been saying for some time that it would not touch official interest rates until after it has stopped buying government and corporate bonds.

Still, there has been speculation it could raise the so-called deposit rate — the interest that banks receive on money they keep at the bank — sooner.

Since June 2014, the rate has been negative, meaning banks have had to pay the central bank to keep their euros safe. Any hint that the bank has been contemplating an increase in the deposit rate would be big news.

Ignoring Pleas for Change

Without fail, the central bank’s monthly statements beseech leaders in the…

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