The European Central Bank will announce its interest rate decision at 7:45 a.m. ET. This will be followed by a press conference with ECB head Mario Draghi.
Economists expect the ECB to hold the main refinancing rate at 0.15%, the marginal lending facility rate at 0.40% and the deposit facility rate at -0.1%.
Draghi pushed interest rates into negative territory at the last meeting in an effort to combat weak growth and prevent deflation.
The move was also intended to weaken the euro, but that hasn’t really happened. This chart shows the weakness in the Euro against the dollar following the meeting that didn’t last long.
While economists aren’t looking for any major policy announcements they are looking for commentary on a few key things: details on targeted Long-Term Refinancing Operation (TLTRO) conditions and potential asset backed securities purchase programs.
The TLTROs are subsidized loans in targeted areas, and are intended to boost lending to the non-financial private sector. However, they exclude loans for home purchases.
Anatoli Annenkov at Societe Generale expects that the ECB will see how its TLTROs go before making any other policy moves.
“We remain sceptical as to the effectiveness of the negative deposit rate and more liquidity to deliver a significant easing in fragmentation and higher inflation,” writes Annenkov. He expects a move focused on asset purchases in early 2015.
Draghi is also likely to face some questioning on forward guidance following his comments to Dutch publication De Telegraaf.
“We have prolonged banks’ access to unlimited liquidity up to the end of 2016,” Draghi said. “That is a signal. Our programme in support of bank lending to businesses will continue for four years. That shows that interest rates will remain low over a longer period. But thereafter they will increase when the recovery will firm up.”
We’ll be covering the decision LIVE at Business Insider.
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