The European Central Bank has left rates unchanged, as expected, in its meeting Thursday.
The central bankers are in Naples, Italy, to announce their latest monetary policy decisions. At 8:30 ET (1:30 p.m. BST) there will be a news conference with ECB president Mario Draghi.
The ECB is going to lay out the details of the asset-backed securities and covered bonds it plans to buy. The purchasing plan “may include bundles of Greek and Cypriot bank loans with ‘junk’ ratings, a move that is likely to be unpopular with Germany,” The Financial Times said.
The ECB is looking to bring back its balance sheet to around €3 trillion ($3.8 trillion), which would require an increase of around €1 trillion ($1.3 trillion) from where it currently stands. The size of the purchases announced today will provide a good indicator of whether the central bank can achieve that.
A Reuters poll of Eurozone money market traders suggested that €200 billion ($252.7 billion) in ABS and covered bond purchases are expected. Jefferies’ Marchel Alexandrovich expects that a smaller announcement of €80-100 billion ($101-126 billion) purchases would be enough “to signal a serious commitment.” Societe Generale analysts are expecting an announcement more in the range of €130-150 billion ($164-189 billion).
Draghi will likely field questions about quantitative easing, although Gennadiy Goldberg, a strategist at TD Securities, told the FT that the ECB is not expected to announce any major stimulus measures at Thursday’s meeting.
The meeting is in Naples today, a part of Italy that has been hit particularly hard by the crisis. There are some sizeable protests, which you can follow on Twitter with the #BlockBCE hashtag.