On 8 June the ECB will present its new forecasts for growth and inflation. The new data will be good news, the European Economic Area inflation rate is currently 1.9% (April 2017) and will continue to come close to the 2% target. Growth is set to continue towards a pleasing 1.6 to 1.8%. Against this background, the ECB will most likely decide in its September meeting to cut back bond purchases, which currently amount to €60 billion per month.
This will have an effect on interest rate structures, even though, in our opinion, an increase in the key interest rate does not seem realistic until 2018. We therefore recommend that senior loans issued until the end of autumn should have fixed long-term interest rates with provision for early redemption, rather than variable interest rates.