© AFP via Getty Images Following the European Central Bank decision on interest rates at 1:15pm London time, Christine Lagarde will meet the press at 1:45pm. Central bank watchers will be on the lookout for clues as to the governing council’s thinking. Another half point in March? The ECB is expected to raise rates by half a point not only on Thursday but also in March. That would take the deposit rate to 3 per cent, its highest level since October 2008. In Davos, Lagarde signaled that the ECB would “stay the course” on raising rates — a hint that more than one half-point rise was planned. Analysts will be watching for any hints on when the ECB president expects rates to peak, which most analysts believe will be in the summer. A more resilient economy The latest data on the eurozone economy has been surprisingly upbeat, with output expanding by 0.1 per cent between the third and fourth quarters, according to Eurostat data. With the eurozone set to avoid a recession this winter, the ECB’s December estimates of a 0.5 per cent expansion this year now look about right. It will be interesting to see if the ECB president is more bullish after this week’s gross domestic product figures and evidence that business and consumer confidence is rebounding. A stronger euro One of the reasons why the ECB had to raise rates so swiftly during the latter half of 2022 was the dollar’s strength, which raised the cost of imports. However, with the US Federal Reserve shifting to quarter-point interest rate rises, the euro has been appreciating against the US currency. The region’s import bill is set to fall, which may prompt Lagarde to think that inflation could fall closer to the central bank’s target earlier than expected. Tightening the balance sheet The ECB is also preparing to shrink its balance sheet, buying fewer bonds from the proceeds of the maturing securities that it already owns. Some investors warn that the shrinking of the balance sheet will spark concerns over the solvency of member states such as Italy. Expect the ECB president to face questions on this.