Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 11:45 GMT, followed by the press conference at 12:30 GMT. Meeting is to be held at the central bank of Latvia.
Current policy measures–
- Deposit facility rate at -0.40 percent
- Refinancing rate 0.00 percent
- Marginal lending facility rate at 0.25 percent
- ECB has several TLTROs in its portfolio.
- Assets can be bought at yields below the deposit rate.
- In the latest action, ECB tapered asset purchases to €30 billion and extended the program until September 2018.
Expectation today –
- European Central Bank (ECB) is expected to maintain its current policy.
- With ECB announcing clear path until September, no action is likely.
- However, the market is looking for a guidance on future actions and a bit desperately.
What to watch out for –
- Change in inflation forecast.
- Take on tapering or on the future path of monetary policies.
- The high level of NPLs in European banks, especially in Italy.
- Political trouble in Italy, where populists have won the majority of the votes.
- Contingency plans for a looming trade war with the United States.
- Contingency plans from the Brexit fallouts.
- Whether ECB seems comfortable with the level of the Euro or does Draghi talk the currency down.
Impact –
The euro has remained upbeat despite the European Central Bank (ECB) extending the asset purchase program beyond expectation. Though it has suffered decline since March/April due to rising rates in the U.S. and Italy’s political trouble.
The euro is currently trading at 1.18 against the USD.
