What to expect from ECB today?

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

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 March, ECB has launched four new TLTROs.

Expectation today –

• European Central Bank (ECB) is expected to maintain its current policy. This is ECB’s first meeting since the UK referendum, so lot many people are expecting strong hints or actions from the ECB, however now is too early to take decisions on actions.

What to watch out for –

• ECB’s take on the UK referendum and what plans it has to mitigate future risks. The market would be expecting concrete measures rather than just saying that all tools at ECB’s disposal.
   
• ECB’s take on the crumbling Italian banks and what support the central bank may provide. ECB’s take on Italian government will and wish to recapitalize banks with taxpayers’ money.
   
• Greater clarification regarding corporate purchases.
   
• Weather ECB keeps the door open for further asset purchases stimulus or not?
   
• Does ECB leave the door open for further interest rate cut?
   
• Could there be difficulties with shortages of eligible bunds.

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 Brexit fear and stimulus expectations are likely to weigh on the single currency.

The euro is currently trading at 1.102 against the dollar.