As largely expected, the actual ECB press announcement did not contain major surprises, which saw the ECB keep all three key rates unchanged, adding that “the monthly asset purchases of €80 billion are intended to run until the end of March 2017, or beyond, if necessary” and that it expects “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.”
There was some modest kneejerk market disappointment, expressed in German 10Y Bunds whose yields rose 3 bps to -0.09%, after the ECB did not lower the -0.40% deposit facility rate, as some had whispered may happen.
Perhaps more importantly, there was no formal extension to the QE program, which kept its old deadline, and which means that the ECB will extend the duration at its December meeting as much of the sellside community had expected.
From the press release:
At today’s meeting 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.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 14:30 CET today.
Now all attention turns to Draghi’s press conference in 45 minutes.