ECB leaves policy unchanged

The ECB held interest rates at 0.0%, the deposit facility rate at -0.40% and the marginal lending facility rate at 0.25%.

The Governing Council also kept the asset purchase programme at €80bn per month.

“ECB will want to see how its further stimulus injection plays out before slicing rates again, but we’re about to embark on a very volatile period for the EU with Britain’s upcoming referendum," said Dennis de Jong, managing director of UFX.com.

“Last week’s IMF report highlighted the wide range of problems and fragility within the Eurozone banks that pose a huge threat to both the European and global economy. Draghi and his ECB colleagues will be seriously worried that a Brexit could exacerbate these issues.”

In March, the ECB surprised the market as it slashed its main interest rate by five basis points and increased quantitative easing by €20bn. The ECB also cut the deposit facility rate by 10bps and the marginal lending facility rate by five basis points.

“Despite the comprehensive package of easing, which was announced in March, the ECB is still under pressure to ease again as inflation expectations remain around a historically low level, while the effective euro has strengthened following the easing from the ECB,” said Danske Bank.

Minutes of the ECB’s last meeting showed that the Governing Council “would not rule out future cuts in policy rates” as new shocks might change the outlook for inflation and warrant further action.

Governor Mario Draghi’s press conference at 1330 BST will be monitored closely on Thursday for any clues on the ECB’s next move.