The ECB left all benchmark interest rates on hold following the latest Council meeting with the main refi rate remaining at 0.0% and the deposit rate at -0.40%. The decision was in line with consensus forecasts with no expectations of any move to change rates at this meeting.
According to the statement, the bank expects that interest rates will be held at present levels for an extended period and well past the horizon of net asset purchases.
The statement reiterated that the bond purchases are intended to run at the present rate of EUR60bn per month until the end of December 2017 and beyond if necessary. In any case purchases would continue until the ECB sees a sustained adjustment in inflation consistent with its inflation aim.
If the outlook becomes less favourable, or financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the council stands ready to increase the programme in terms of size or duration.
This forward guidance was unchanged from the previous meeting and there was no move to take out references that the programme could be increased, maintaining the dovish bias.
President Draghi’s press conference will be watched closely for any further policy hints surrounding the bond-purchase programme for 2018 and whether there is any direct rhetoric raising concerns surrounding the Euro’s level.
The Euro edged lower following the statement given the possibility of a shift in forward guidance, although EUR/USD was still significantly higher on the day at 1.1975 from highs near 1.1995. Bunds remained slightly higher on the day.