REUTERS/Francois Lenoir
The consensus prediction is that the ECB will leave the benchmark refinancing rate unchanged at 0.25% and the overnight deposit rate unchanged at 0.0%. The central bank surprised market participants in November by lowering the refi rate to 0.25% from 0.50%.
"We do not expect any action from the ECB on Thursday as macro indicators have remained consistent with a gradual recovery and tensions in interbank markets have eased in the New Year," says Frederik Ducrozet, a senior eurozone economist at Crédit Agricole.
"Beyond January, the bar for radical action (negative rates; asset purchases) remains high, in our view, but the ECB will stand ready to counter any unwarranted tightening in monetary conditions. A further strengthening of the forward guidance remains on the radar. Fighting financial fragmentation - for example through a targeted LTRO - looks desirable despite significant implementation risks."
Following the release of the policy statement at 7:45, ECB president Mario Draghi will hold his monthly press conference and Q&A with reporters beginning at 8:30.
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