The FT is out with an article citing senior ECB officials on what the central bank will do at Thursday’s meeting.
Senior ECB officials have hinted that they will also present measures to tackle the plight of the eurozone’s struggling SMEs to counter what ECB president Mario Draghi this week dubbed a “pernicious negative spiral” of low inflation and tight borrowing constraints.Jens Weidmann, Bundesbank president, is planning to support the ECB’s proposal to ease constraints on smaller businesses in more troubled parts of the currency bloc, according to a senior European central banker, but his vote for rate cuts is thought to be more finely balanced.
The ECB is expected to announce a fixed-rate offer of cheap central bank funds, often referred to as a longer-term refinancing operation, according to two people familiar with the matter. Under the LTRO, banks could borrow as much as they wanted from the central bank in the form of loans with maturities of a number of years.
This is a somewhat dovish development. Negative rates are no big surprise but still aren’t fully expected but more credit easing including unlimited LTROs for “a number of years” [more than 3?] are significant easing steps, although somewhat expected.
The article says the LTROs will be shaped around the UK funding for lending scheme.
There’s a case for selling the euro on this but it’s perilous trading so close to the weekend.
