ECB Draghi's press conference
European Central Bank announced a package of dovish monetary measures:
- ECB cut interest rates by 10 bps to 0.15% (versus expected 0.10%) and the deposit rates to -0.1%
- The regulator will launch quantitative easing (QE) by purchasing asset-based securities (ABS) securities - size of program is still under discusion
- ECB ends bond purchase sterilization (SMP)
- ECB will conduct 2 targeted LTRO in September and December 2014, €400 billon each
- ECB aims to improve the transmisson mechanisms of monetary policy
- Draghi said ECB finished with cutting rates. However, further unconventional measures remain on the table.
- 2014 economic forecast lowered from 1.2% to 1%
- 2015 forecast revised up from 1.5% to 1.7%
- There are still risks of a further downside revision
- 2014 forecast lowered from 1.0% to 0.7%
- 2015 forecast lowered from 1.3% to 1.1%
EUR/USD fell to $1.3500 on the news, but bounced back to $1.3550.