ECB keeps key rates unchanged

The European Central Bank (ECB) has decided that its key rates will remain unchanged, as projected by analysts.

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 0.05%, 0.30% and -0.20% respectively.

The ECB will hold a press conference at 13:30 BST. Follow Digital Look's live coverage here.

"The ECB’s decision to leave interest rates on hold was no surprise and the press conference will be of much greater interest – we expect pretty strong hints of forthcoming quantitative easing," said Capital Economics. "President Draghi stated firmly last month that interest rates had finally reached a trough. But with the economic outlook deteriorating further since then and inflation dropping to just 0.3%, the ECB is under pressure to provide more policy support."

Draghi is also expected to outline details of the asset-backed securities (ABS) programme, which come into effect in October.

Purchases are forecast to be relatively limited, however. President Mario Draghi may voice modest disappointment at the low uptake at the Bank’s first TLTRO and state that the December operation is likely to attract more support," Capital Economics added.

"Nonetheless, it seems clear that existing policies will neither achieve the Bank’s targeted €1trn increase in the size of its balance sheet nor generate an economic recovery strong enough to remove the risk of deflation."