The last meeting of the European Central Bank this year will be held in the context of political tensions, economic uncertainty, and market volatility. The epidemic of "yellow vests" protests is no longer confined to France. Literally today, protesters blocked one of the most important roads in Poland by staging an unauthorized rally. By the way, the French "revolution" is still not subsiding. According to the European press, tomorrow in Paris, a vote will be held on a vote of no confidence in the French government.

In Britain, a similar issue will be considered today. Approximately at 20:00, the British parliament will vote to issue a vote of no confidence in Prime Minister Theresa May. 316 deputies from the Conservative Party should take part in the vote. If the majority of them vote against the current prime minister, the conservatives will have to elect a new leader. The law will set aside a three-month period for this. Having lost the status of the leader of the Conservative Party, Theresa May will lose the post of prime minister, respectively. There is also a downside. If the conservatives support it, then it will receive annual immunity from such votes. Many representatives of the Tory have already expressed their support for May (according to preliminary data, about a hundred deputies), but the intrigue in this matter still remains, just as in the issue of the prospects of Brexit.

The British Prime Minister is now unsuccessfully trying to convince her European colleagues that they need to provide London with guarantees regarding the timing of the back-stop. Apparently, this issue will be discussed already at the EU summit, which will begin its work tomorrow. The fate of the "soft" Brexit largely depends on the position of Brussels, because the issue of the Irish border is a key stumbling block for many British parliamentarians. Here, it should be recalled that on December 20, the deputies leave for a prolonged vacation (until January 7), so if the members of the Alliance do not accept the appropriate compromise solution, the consideration of this issue will be postponed to mid-January.

Naturally, such a high degree of uncertainty will exert strong pressure on the members of the ECB. Moreover, in addition to the above problems, there is also the Italian question, which also hangs in the air. The budget epic is accompanied by numerous rumors that often contradict each other. Literally this morning in the press, there was information that Rome is not ready to significantly change the parameters of its budget. However, in the second half of the day, a different inside appeared, allegedly Italians agreed to cut the budget deficit to two percent. If this information is confirmed, the European Commission is very likely to agree on the draft Italian budget and the months-long conflict will be settled. Here, it is worth noting that over the past weeks, such signals (false) have entered the market more than once. Therefore, it is too early to talk about resolving the Italian problem.

Summing up the year, members of the ECB will not be able to ignore the fact of slowing down of key macroeconomic indicators. Let me remind you that the consumer price index fell to two percent, with a forecast of growth to 2.1%. Core inflation, excluding volatile energy and food prices, returned to one percent, although experts were confident that the indicator would remain at the October level, that is, at around 1.1%.

German inflation also disappointed traders. The consumer price index has been falling there for the second month in a row, having reached one-tenth of a percent in November. Germany is considered the "locomotive" of the European economy, so these figures are a very alarming signal. The unemployment rate in the eurozone also "let down". The figure remained at the level of the previous two months, that is, at around 8.1%. And although the negative dynamics is minimal, the trend itself is disturbing, especially in light of the slowdown in eurozone GDP and Mario Draghi's pigeon comments.

After all, if we consider the release on inflation in the aspect of the rest of the reporting, then the overall picture is quite negative. For example, previously published PMI indices in European countries are in the red zone, reflecting the deterioration of the situation in the manufacturing and services sectors. In particular, the eurozone manufacturing PMI fell to 30-month lows, while the German similar indicator updated the annual minimum. These figures are consistent with the slowdown in economic growth in the Eurozone, which was recorded in the third quarter of this year. GDP growth in the Eurozone slowed down to four-year lows.

Given the above, members of the ECB tomorrow may sound softer rhetoric about the prospects for monetary policy next year. It is not excluded that the regulator will transfer the approximate date of the rate increase for 2020. In this case, the euro will be under pressure throughout the market. However, such a scenario is rather improbable. The European regulator now has no need for excessive volatility in the markets. Most likely, the ECB will take a cautious and "tacit" position regarding the prospects for monetary policy.

Thus, the basic scenario of tomorrow's meeting includes several items. First, the regulator will "officially" end the incentive program. Secondly, the ECB will slightly lower its growth forecasts, but at the same time declares that the risks in the eurozone economy are "balanced". Thirdly, he will talk about reinvestment and the prospects of a new round of TLTRO. In general, if Mario Draghi does not "transfer" the approximate rate increase date to 2020, the regulator can support the European currency, primarily because the market initially does not expect any "hawkish" notes from the ECB against the background of recent economic and political developments.