|

ECB leaves benchmark interest rate unchanged at 0% as expected

At its monetary policy meeting held today, the Governing Council of the European Central Bank (ECB) decided to leave the interest rates on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.00%, 0.25% and -0.40%, respectively. Attention now turns to the  ECB President Mario Draghi's press conference at 12:30 GMT.

Key highlights from the official statement

  • Governing Council expects key ECB rates to remain at present levels through H1 2020.
  • Rates will remain like that until inflation reaches the goal.
  • Will keep investing repayments from APP.
  • Regarding the modalities of the new series of quarterly targeted longer-term refinancing operations (TLTRO III), the Governing Council decided that the interest rate in each operation will be set at a level that is 10 basis points above the average.
  • For banks whose eligible net lending exceeds a benchmark, the rate applied in TLTRO III will be lower and can be as low as the average interest rate on the deposit facility prevailing over the life of the operation plus 10 basis points.
  • TLTRO interest rate in each operation will be set at a level that is 10 basis points above the average rate applied in the Eurosystem’s main refinancing operations.

Related articles

ECB Preview: Major Banks expectations from June meeting.

Most of the researchers and economists are forecasting, that the ECB will likely remain on hold this month and offer few fireworks, while maintaining its easing bias. In addition, they are expecting further easing on the forward guidance side and a cautious tone on the TLTRO III terms.

ECB: Will Draghi surprise again? – Nordea Markets.

Jan von Gerich, analyst at Nordea Markets, expects that the ECB will extend its forward guidance, however markets are already pricing a clear probability of a further rate cut from the ECB hence it should not be a major market mover.

About ECB's press conference

Following the ECB´s economic policy decision, the ECB President gives a press conference regarding monetary policy. His comments may influence the volatility of EUR and determine a short-term positive or negative trend. His hawkish view is considered as positive, or bullish for the EUR, whereas his dovish view is considered as negative, or bearish.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
Share:

Editor's Picks

GBP/USD revisits 1.3530; Dollar pushes harder

GBP/USD adds to the weekly correction and recedes toward the 1.3530 zone on Friday. Indeed, Cable faces increasing selling pressure on the back of extra gains in the Greenback, particularly fuelled by Chair Warsh’s speech at the Jackson Hole Symposium and the US NFP Annual Revision (-79K).

EUR/USD breaches below 1.1600, multi-day lows

EUR/USD now accelerates its decline and retreats to seven-day troughs in the sub-1.1600 region at the end of the week. The pair’s pullback comes on the back of the strong rebound in the US Dollar after Chair Warsh delivered a hawkish message in Jackson Hole, while the US NFP Annual Revision came in at -79K.

Gold bounces off $4,425 on US Dollar pullback

Gold recovers slightly from a one-and-a-half-week low near $4,425 in the Asian session on Monday, though any meaningful recovery seems elusive. Fed Chair Kevin Warsh’s Jackson Hole speech was perceived as hawkish, raising expectations for a September rate hike. Adding to this, fresh US strikes on Iran act as a tailwind for the safe-haven US Dollar and should cap the bullion.

Week ahead: RBNZ and BoC decide on rates ahead of all-important US NFP
The US dollar staged a modest recovery this week, perhaps as traders decided to cover some of their short positions amid slightly stickier or in-line US PCE inflation numbers for July, confounding expectations of softer prints amid the softness revealed in the CPI data for the month.
US Dollar Weekly Forecast: Focus is back on 100.00 as Fed hawks take centre stage

It has already been a positive week for the US Dollar, but a hawkish speech from Chair Kevin Warsh at the Jackson Hole Symposium may have laid the groundwork for a more sustained rebound in the Buck.

Diesel’s record $100 warning: The oil shock hiding in plain sight

The Oil market may look calmer than it did a few months ago, but diesel is sending a very different message. The US diesel crack spread, the premium of ultra-low sulphur diesel futures over WTI, recently surged above $100 per barrel for the first time, reaching an intraday record of just over $102.00.