The European Central Bank just plunged its deposit rate further into negative territory, from -0.20% to -0.30%.
Just ahead of the announcement, the Financial Times tweeted out a false report that the ECB had shocked markets and held rates, sending the euro spiking.
At 1:30 p.m. GMT (8:30 a.m. ET) ECB President Mario Draghi will step up to take questions from the press — that could be pretty crucial.
The ECB’s statement of its monetary policy decisions also says “further monetary policy measures will be communicated” during the meeting.
At the January meeting when the quantitative easing (QE) programme was announced, the scale of the scheme was only revealed when Draghi sat down.
Since October, Draghi and other ECB governing council member have been dropping hints about more easing to come.
The short story is that eurozone inflation has remained close to zero and growth this year has been modest at best. The once-reluctant ECB is now ready to spring into action, and markets are expecting a move.
Here’s what researchers at ABN AMRO listed as the major potential outcomes. The ECB could meet, beat or fall below expectations — if it beats or misses what markets are expecting, there could be a major reaction:
The 10 basis point cut in the deposit rate falls into the “missing expectations” category.
A bigger-than-expected package might send the euro south against the dollar, while a disappointment might cause it to strengthen. Goldman Sachs is one of a number of institutions expecting the single currency to drop to parity with the dollar by the end of December.