ECB left interest rates unchanged

Thursday, Jul 21 2016

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.

At the following Press Conference it was stated that large uncertainties prevail on Brexit impacts because first of all these figures will in the end depend on how long is the stretch of time for these negotiations to be completed and therefore to give a certain outlook which we don't have today. And second, these figures will also depend on what kind of outcome is going to come out, so I think they have to be taken with a grain of caution. What is clear is that financial markets and the banking sector have reacted in a fairly resilient fashion to the event. Also Draghi said that in the past they've given enough evidence ... of the ability to adapt their purchases to reach 80 billion euros a month until March 2017 or beyond.

Euro is currently being traded few points below 1.1020 level. Pair is likely to find support around 1.10 handle and resistance above 1.11 level.

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