The European Central Bank (ECB) may be ready to normalize monetary policy at a faster rate, now that the Eurozone recovery appears to be gaining steam, according to a recent Bloomberg survey.

Economists have reduced their estimate for how long it will take for the ECB to end its quantitative easing program, the results of the Bloomberg survey showed on Monday. Analysts also raised their forecast for when policymakers will raise interest rates. The survey results showed that the ECB will revised its forward guidance on monetary policy as early as June, which is six months earlier than a previous poll.[1]

Although the survey was conducted before the first round of France’s presidential election on Sunday the 23rd of April, analysts say the ECB is probably waiting for Marine Le Pen to be defeated in the upcoming French election before moving forward on policy tightening.

On Sunday, Le Pen advanced to the second-round run-off election, where according to current polls, she is expected to be swiftly defeated by independent centrist Emmanuel Macron. Le Pen has been a major source of concern for both Europhiles and investors. If elected, the leader of the far-right National Front has vowed to exit both the euro and European Union (EU). The so-called Frexit scenario could unleash waves of volatility on the currency region.

The ECB is scheduled to meet on Thursday in Frankfurt to discuss monetary policy and set interest rates. Although no change in policy is expected, officials could begin initial discussions on rolling back quantitative easing.

Officials are no doubt monitoring economic growth and inflation, which have pointed higher in recent months. In February, Eurozone inflation rose 2% compared to a year earlier. That was the fastest rate in four years.[2] Measures of unemployment and industrial production have also improved.

The ECB adopted emergency policies in a desperate attempt to avoid a triple-dip recession in the wake of the financial crisis. The currency region has been rocked by multiple financial crises since 2008, which have given traders reasons to question the future of the euro.

The bank’s prolonged stimulus push has drawn severe criticism from Germany, which has shouldered the bill for repeated attempts to kick-start the region’s weakest economies.

“Higher inflation deprives the ECB of the basis for its policy of cheap money,” Ralph Brinkhause, a deputy chairman of Chancellor of Angela Merkel’s parliamentary group, said last month. “An abrupt change of monetary policy will not be possible without economic consequences. Therefore, the ECB should now prepare the beginning of the end and communicate this credibly.”[3]

[1] Alessandro Speciale and Andre Tatar (April 23, 2017). “Draghi Seen Choosing Faster Exit Once French Hurdle Cleared.” Bloomberg Markets.

[2] Claire Jones and Stefan Wagstyl (Mach 2, 2017). “Pressure on ECB as eurozone inflation hits 4-year high.” Financial Times.

[3] Claire Jones and Stefan Wagstyl (Mach 2, 2017). “Pressure on ECB as eurozone inflation hits 4-year high.” Financial Times.