I am the one who knocks

European Central Bank, Draghi Stand Pat

in central banks/Credit/FX by

We’re not entirely sure how the market is going to take this, but “Super Mario” stood pat on Thursday. Here are the bullet points via Bloomberg:

  • ECB LEAVES DEPOSIT FACILITY RATE UNCHANGED AT -0.4%
    ECB LEAVES MARGINAL LENDING FACILITY UNCHANGED AT 0.25%
    ECB LEAVES MAIN REFINANCING RATE UNCHANGED AT 0%
    ECB KEEPS ASSET-PURCHASE PROGRAM AT 80 BILLION EUROS A MONTH
    ECB REAFFIRMS PLAN TO RUN QE TO MARCH 2017 OR BEYOND IF NEEDED

And here’s the PR:

“At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. The Governing Council continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time, and well past the horizon of the net asset purchases. Regarding non-standard monetary policy measures, the Governing Council confirms that the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary, and in any case until it sees a sustained adjustment in the path of inflation consistent with its inflation aim. The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.”

The presser is next at 8:30 ET.

So far, not much reaction in futs, although we got a pop in the euro:

eur

From the presser:

DRAGHI: QE WILL RUN UNTIL INFLATION PATH CONSISTENT WITH GOAL
DRAGHI SAYS ECB TASKED COMMITTEES TO EVALUATE STIMULUS OPTIONS
ECB CUTS 2018 GDP GROWTH FORECAST TO 1.6% FROM 1.7%

DRAGHI SAYS ECB DIDN’T DISCUSS EXTENSION OF ASSET-PURCHASE PLAN

“If warranted we will act by using all the instruments available within our mandate,” European Central Bank President Mario Draghi says at a press conference in Frankfurt on Thursday. While the available evidence so far suggests resilience of euro area economy to political and economic uncertainties, our baseline scenario remains subject to downside risks. As a result we continue to expect to continue real GDP to grow at a moderate but steady pace and euro-area inflation to rise gradually in the coming months in path implied in June 2016 staff projections.”

German bonds do not like it. Not one bit:

german

And neither does the periphery:

  • 10Y sector underperforms across peripheral curves; 10Y Italy +6bps, Spain +5bps, Portugal +5bps

1 Comment

  1. It will be nice to follow you here as the trolls on SeekingAlpha are a bit much. Thanks for what you’re doing for us Theo Traders. Mark

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