- Previous vote (1/9):
Held at 0.25%
- Latest vote 2/6
Cut to 0.25%
- Next meeting:
- EUR/USD – Euro Improves On Spanish and Eurozone Data
- Eurozone Markit services PMI April 53.1 vs 53.1 exp
- German Markit services PMI April 54.7 vs 55.00 exp
- EUR/USD Staying Firm Ahead of the FOMC Statement
- What are markets expecting from eurozone CPI now?
- Is the inflation data enough now for action from the ECB?
- German HICP prelim April m/m -0.3% vs -0.1% exp
- Eurozone economic sentiment April + 102 vs +103 exp
- Bundesbank says German GDP to “slow noticeably” in Q2
- Greece still needs EU help to stay afloat
- EURNZD Pulls Back to Short
- EUR/USD: Trading The Germany’s Consumer Confidence Report
- EUR/USD Trading at 2014-Highs Ahead of ECB Meeting
- Is 1.40 inevitable in EUR/USD?
- EUR/USD – Euro Improves On Spanish and Eurozone Data
- EUR/USD – No Change, Remains around 1.3880
- EUR/USD – Euro Shrugs off Superb US Nonfarm Payrolls
- EUR/USD – Reinforces Strength of Current Trading Range
- Daily Forex Update: EUR/JPY
- EUR/USD Anticipating Directional Clues for Next Week
Feb. 6, 2014 – Since cutting the key interest rate to 0.25% in Nov. 2013, the ECB has been leaving the rate unchanged. Inflation continues to fall, and continues to be a factor in the expected duration of the current low interest rate environment. Draghi reiterated this in his introductory statement to the ECB press conference:
“We firmly reiterate our forward guidance. We continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation is based on an overall subdued outlook for inflation extending into the medium term, given the broad-based weakness of the economy and subdued monetary dynamics.” - Excerpt from the transcript of the 2/6 ECB press conference.
Jan. 9, 2014 - The ECB decided to hold interest rates at the 0.25% level. Recent slide in inflation did not prompt further easing, but did prolong the ECB’s expectation of the duration in which it will have to operate under the historically low interest rates. The interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were left on hold at 0.25%, 0.75% and 0.00% respectively.
“Inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2%. As stated previously, we are now experiencing a prolonged period of low inflation, which will be followed by a gradual upward movement towards inflation rates below, but close to, 2% later on. Regarding the medium-term outlook for prices and growth, further information and analysis will become available in early March. Recent evidence fully confirms our decision to maintain an accommodative stance of monetary policy for as long as necessary, which will assist the gradual economic recovery in the euro area. We firmly reiterate our forward guidance. We continue to expect the key ECB interest rates to remain at present or lower levels for an extended period of time. This expectation is based on an overall subdued outlook for inflation extending into the medium term, given the broad-based weakness of the economy and subdued monetary dynamics.” – Excerpt from the transcript of the 1/9 ECB press conference
Learn about the European Central Bank
The ECB’s main objective is to maintain price stability within the Eurozone, defined as inflation around 2% year-on-year, as measured by the Harmonised Index of Consumer Prices
It also monitors the banking sector as seen in its intervention during the 2007 credit crisis where it lent billions of euros to banks to stabilize the financial system.(HICP).
In U.S. style central banking, liquidity is furnished to the economy primarily through the purchase of Treasury bonds by the Federal Reserve System. The Eurosystem uses a different method. There are about 1500 eligible banks which may bid for short term repo contracts of two weeks to three months duration. (wiki – http://en.wikipedia.org/wiki/European_Central_Bank)
The ECB has 3 decision-making bodies.
1) Governing Council –
- Adopt guidelines and make all decisions for the Eurosystem, including the ECB and all euro area central banks.
- Monetary policy for the euro area, including monetary objectives, key interest rates, supply of reserves in the Eurosystem and guidelines on how to implement them.
2) Executive Board –
- Prepare board meetings
- Implement monetary policy decided by the governing council. Gives instructions to euro area national central banks
- Manage day to day operations of the ECB
- Regulation based on powers delegated by the governing council
3) General Council – a transitional body to deal with issues in the adoption of the euro, and will dissolve once all the EU members have adopted the euro. Responsibilities include but not limited to:
- Advices the ECB
- Collects statistical information
- Preparation of ECB’s annual report
- Standardizing accounting and reporting of operations by national central banks
1) Governing Council
- Mario Draghi (president of ECB), Vitor Constâncio (VP of ECB), Jörg Asmussen, Benoît Cœuré, Yves Mersch, Peter Praet, Luc Coene (Gov. National Bank of Belgium), Jens Weidness (Deutsche Bundesbank), Patrick Honohan (Central Bank of Ireland), George A. Provolpoulos (Bank of Greece), Luis Marisa Linde (Governor, Banco de España), Ardo Hansson ( Governor, Eesti Pank), Christian Noyer (Governor, Banque de France), Ignazio Visco (Governor, Banca d’Italia), Panicos Demetriades (Gov, CB of Cyprus), Gaston Reinesch (Gov, Banque central du Luxumbourg), Josef Bonnici (Gov, CB of Malta), Klaas Knot (Pres, De Nederlandsche Bank), Ewald Nowotny (Gov Oesterreichische (Austrian) Nationalbank), Carlos Costa (Gov. Banco de Portugal), Marko Kranjec (Gov. Banka Slovenije), Jozef Makúch (Governor, Národná banka Slovenska), Erkki Liikanen (Gov. Suomen Pankki – Finlands Bank)
2) Executive Board:
- Mario Draghi (president of the ECB)
- Vitor Constâncio (VP of ECB)
- Jörg Asmussen
- Benoît Cœuré
- Yves Mersch
- Peter Praet
3) General Council
- Mario Draghi , Vitor Constâncio, Luc Coene, Ivan Iskrov (Gov. Bulgarian National Bank), Miroslav Singer (Gov. Czech National Bank), Lars Rohde (Danmarks Nationalbank), Jens Weidmann (Pres. Deutsche Bundesbank), Ardo Hansson (Gov. Eesti Pank), Patrick Honohan (CB of Ireland), George A. Provolpoulos (Bank of Greece), Luis Marisa Linde (Governor, Banco de España), Christian Noyer (Governor, Banque de France), Ignazio Visco (Governor, Banca d’Italia), Panicos Demetriades (Gov, CB of Cyprus), Ilmārs Rimšēvičs (Gov. Latvijas Banka), Vitas Vasiliauskas (Chairman of the board, Lietuvos bankas), Gaston Reinesch (Gov. Banque Centrale du Luxembourg), András Simor (Governor, Magyar Nemzeti Bank), ), Josef Bonnici (Gov, CB of Malta), Klaas Knot (Pres, De Nederlandsche Bank), Ewald Nowotny (Gov Oesterreichische (Austrian) Nationalbank),Marek Belka (Pres. Narodowy Bank Polski), Carlos Costa (Gov. Banco de Portugal), Mugur Isărescu (Governor, Banca Naţională a României), Marko Kranjec (Governor, Banka Slovenije), Jozef Makúch, Governor, (Národná banka Slovenska), Erkki Liikanen (Governor, Suomen Pankki – Finlands Bank), Stefan Ingves (Governor, Sveriges Riksbank), Mervyn King (Governor, Bank of England)
source: official ECB page