What to expect from the ECB later today?
The ECB isn't expected to surprise with anything today
If the ECB could, they would pretty much say nothing at all today as they are largely awaiting on how things are going to unfold in Brussels on the recovery fund this weekend.
But alas, they have to put on a show for markets later when announcing their policy decision at 1145 GMT and via Lagarde's press conference at 1230 GMT.
Given the current predicament, don't expect much from the ECB today. They are very much in wait-and-see mode now after having bolstered the PEPP stimulus last month.
Hence, there should be no significant policy changes to rates, QE or PEPP for that matter. Their outlook and forward guidance should reaffirm more of the same message as we saw in June as well i.e. expecting more of a recovery in Q3 and Q4 this year.
The only possible tweak they may go with is with regards to the rate tiering multiplier, something that was mentioned last month here as well. They may choose to do so if they feel that they want to ease the burden on banks moving forward.
Apart from that, they may continue to give a warning to lawmakers on the need to compromise on the recovery fund ahead of the EU summit tomorrow.
Otherwise, the main focus will be on Lagarde's press conference and how she will communicate nothing by having to say something.
She has to walk a line between reaffirming that the central bank remains committed to do everything to ensure the recovery but also signalling that they are on the sidelines for the time being i.e. taking a more "safe" and "boring" approach.