• At 1145GMT the European Central Bank announce its latest decision
  • At 1230GMT ECB president Draghi will conduct his regular press conference
  • No-one is expecting any rate cut from the ECB (ohhh, I’m sure there’s an outlier somewhere calling for a cut, probably even some calling for a hike … go figure).

But, this where we are at, and where we will remain after the announcement:

  • Marginal lending facility’s at 0.30%,
  • Main refinancing rate is at 0.05%
  • Deposit rate is at -0.20%

The situation in Europe hasn’t improved since the previous ECB meeting, slow growth, low inflation (waaaaay below the EBC target range), bank lending still disappointing. But don’t expect anything much in the way of new action from the ECB at this meeting. Draghi’s is wanting governments to lift their game: Draghi says monetary policy alone cannot restore confidence and return eurozone to growth

Its not a nothing meeting/presser, though, here are some things to watch for:

Details of the asset-backed securities and covered bonds the ECB plans to buy:

  • How big will the programs be? The ECB may or may not be vague on this, though … (Société Générale analysts are expecting around €130-150 billion)
  • On the ratings threshold – will ABS in Greece and Cyprus be eligible for purchasing even though they are below investment grade? Draghi wants to buy up securities in the most depressed countries in the Eurozone – otherwise the buying just benefits the Eurozone core, the area in least need of stimulus.
  • Expect comments from Draghi (after others have said the same thing recently) that while demand for the ECB’s first installment of four-year loans to banks (TLTROs) was disappointing (€84 billion) take-up at the next lending round in December should improve.
  • Comments on the ECB balance sheet, i.e. returning it to early-2012 levels. Implying an increase of €700 billion to €1 trillion from the current €2 trillion level. Its doubtful that the current mix of four-year loans, ABS and covered bond purchases will do this, so expect Draghi to be questioned on whether additional assets could be added, like corporate bonds or government bonds
  • And … watch for comments on the euro. While its tapping on two-year lows, watch for any Draghi comments on if he sees potential for a further euro decline given divergent monetary policies in the eurozone and U.S.

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