The European Central Bank left the main lending rate at 0.15% and the deposit rate at -0.10%, as expected. The current rates have been set as part of the wide array of measures that the ECB put in place back in June. This comes despite darkening clouds over the euro-zone. The focus now shifts to ECB president Mario Draghi, that holds a press conference at 12:30 GMT. Stay tuned for a live blog of the event.
Towards the publication, EUR/USD traded steadily around 1.3375, down from highs seen yesterday. The euro hardly budges after the announcement. All eyes are on Draghi.
Here are Draghi’s 4 main headaches:
- Even lower inflation: a new 5 year low of 0.4%.
- Slowing growth: Italy in recession, German industry wobbling.
- Banking worries: The banking issues in Portugal’s BES deteriorated quickly. Can the ECB prevent a potentially bigger crisis?
- Russian sanctions: The fresh ban on food imports this weighs on both growth and on inflation, as the euro-zone could suffer from excessive supply of food.
Here is our podcast which discusses the ECB options:Get the 5 most predictable currency pairs