ECB policy meeting preview

Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 11:45 GMT, followed by press conference at 12:30 GMT. Meeting is to be held in Vienna.

Current policy measures–

• Deposit facility rate at -0.40 percent
• Refinancing rate 0.00 percent
• Marginal lending facility rate at 0.25 percent
• ECB buying assets at €80 billion per annum, which to include corporate debt securities.
• In last meeting ECB has launched four new TLTROs.
• From this month ECB is purchasing corporate securities.

Expectation today –

• European Central Bank (ECB) is expected to maintain its current policy.

What to watch out for –

• Changes in growth and inflation forecast as hard data. Most pivotal would be ECB’s view on inflation and impact of relatively higher oil price and recent improvements in financing conditions. Notably Euro area inflation is still in negative despite base effect and higher oil price.

• ECB’s take on Euro.

• Greater clarification regarding corporate purchases

• Weather ECB keeps the door open for further stimulus or not?

• Does ECB leaves the door open for further interest rate cut?

Impact –

• Stimulus comments will be closely scrutinized and also outlook in future.

• ECB president Draghi will try to talk down the Euro and he may succeed as Euro is around resistance.

Euro is retracing a bit, ahead of ECB, Euro is currently trading at 1.12, key resistances lie at 1.126, 1.145 and supports around 1.108, 1.1 and 1.08.