ECB leaves interest rates and QE unchanged

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 speech at the 1:330 GMT press conference.

Key highlights from the official statement (via Reuters)

Tthe governing council expects the key ECB interest rates to remain at their present levels for an extended period of time, and well past the horizon of the net asset purchases.

The eurosystem will reinvest the principal payments from maturing securities purchased under the app for an extended period of time after the end of its net asset purchases, and in any case for as long as necessary.

This will contribute both to favourable liquidity conditions and to an appropriate monetary policy stance.

The president of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today

The governing council confirms that from January 2018 it intends to continue to make net asset purchases under the asset purchase programme (app), at a monthly pace of €30 billion, until the end of september 2018, or beyond, if necessary, and in any case until the governing council sees a sustained adjustment in the path of inflation consistent with its inflation aim.

If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the governing council stands ready to increase the app in terms of size and/or duration.

Key notes

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In view of analysts at BBH, the focus is primarily on the ECB meeting today, while ahead of the meeting, the flash PMI for December showed that growth momentum is continuing, and will likely carry over into next year.  

ECB Preview: 5 Major Banks expectations from December meet.

Today we have an all-important ECB meeting and as we get close to the decision timings, here are the expectations as forecasted by the economists and researchers of 5 major banks for the upcoming meet.

About Mario Draghi

The European Central Bank's president Mario Draghi was born in 1947 in Rome, Italy. Graduated of the Massachusetts Institute of Technology (MIT), Draghi became the president of the European Central Bank in 2011. As part of his job in the Governing Council he gives press conferences in the back of how the ECB observes the current European economy. President's comments may determine positive or negative the Euro's trend in the short-term. Usually, if he shows a hawkish outlook, that is seen as positive (or bullish) for the EUR, while a dovish is seen as negative (or bearish).

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