As expected, the European Central Bank elected to leave the euro area benchmark refinancing rate unchanged at 0.25%, the rate on the marginal lending facility unchanged at 0.75%, and the overnight deposit rate unchanged at 0%.
Next up is ECB president Mario Draghi’s monthly press conference and Q&A with reporters beginning at 8:30.
“We do not expect any action from the ECB on Thursday as macro indicators have remained consistent with a gradual recovery and tensions in interbank markets have eased in the New Year,” says Frederik Ducrozet, a senior eurozone economist at Crédit Agricole.
“Beyond January, the bar for radical action (negative rates; asset purchases) remains high, in our view, but the ECB will stand ready to counter any unwarranted tightening in monetary conditions. A further strengthening of the forward guidance remains on the radar. Fighting financial fragmentation — for example through a targeted LTRO — looks desirable despite significant implementation risks.”
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