What to expect from ECB ahead?

Today European Central Bank (ECB) is to provide further guidance in policy meet. Result to be announced at 12:45 GMT, followed by press conference at 13:30 GMT. Meeting is to be held in Frankfurt.

Current policy measures–

• Deposit facility rate at -0.40 percent
• Refinancing rate 0.00 percent
• Marginal lending facility rate at 0.25 percent
• ECB buying assets at €80 billion per annum, which to include corporate debt securities.
• ECB has launched four new TLTROs.
• In December, ECB announced extension to its current monetary policy.
• From April this year ECB would purchases assets in the tune of €60 billion per month.
• Under the new rule, assets can be bought at yields below the deposit rate.

Expectation today –

• European Central Bank (ECB) is expected to maintain its current policy.
• Some are speculating that the central bank might further wind up its asset purchase program later this year.                                                            

What to watch out for –

• ECB’s take on the recent spike in inflation and market expectations of further tapering.

• ECB’s take on Greece debt restructuring, which is still lingering.
   
• Does ECB leave the door open for further interest rate cut or the next move to be a hike?

• Concerns with regard to European banks’ balance sheet and call for creation of a pan Eupan-Europeanank.

• Contingency plans for the bond markets for the upcoming elections?

• What are the major risks for Eurozone in 2017?

Impact –

The euro has been hovering around 1.05 area for quite some time as the focus remains on the upcoming elections in Netherlands, France and Germany. As the central bank is widely expected to maintain its monetary policy steady today’s policy meeting unlikely to be a major market mover.

The euro is currently trading at 1.056 against the dollar.