ECB rate decision is the main focus for today. The central bank is widely expected to keep benchmark interest rate at 0.00%. Marginal lending facility rate and the deposit facility rate will be held at 0.25% and -0.40% respectively. The forward guidance that interest rates will “remain at their present levels at least through the end of 2019” would likely be untouched too.
Eurozone economy has been slowing down since late last year and the recovery has been very weak. That’s very much reflected in manufacturing PMI which was stuck at 47.7 in May. Deterioration was spreading over to services with PMI held at just 52.9. The survey data indicate a mere 0.2% GDP growth in Q2. Headline CPI also slowed notably to 1.2% yoy in May, well below ECB’s 2% target.
The weak growth and inflation outlook will likely be reflected in the new economic projections to be released today. The question is whether ECB President Mario Draghi will shift to a more dovish tones in the press conference. Also, there’s a chance Draghi could even signal some openness to further easing. Indeed, there are speculations that ECB could cut the deposit rate further into negative territory next year. ECB would also release details of the TLTRO III.
Here are some previews on ECB:
