ECB Will Need to Reassure Markets on France Concerns at Next Meeting

1544 GMT - At its meeting next week, the European Central Bank cannot avoid talking about France, Berenberg economists say in a note. The response should be three-fold, the economists say. "First, to the extent that the French creeping crisis is affecting the outlook for growth and inflation in the eurozone as a whole, the ECB needs to take that into account." This strengthens the case for staying on hold, and indeed markets have already scaled back their expectations for rate hikes in the last four weeks. Second, the ECB may signal in a worsening crisis that it has tools such as the Transmission Protection Instrument to shield other countries from contagion. Third, the ECB will stress it can only support France if Paris returns to more sustainable fiscal policies.