The European Central Bank at the next meeting left the main instruments of its monetary policy on the level of the last two months. According to the regulator, the base interest rate remained at the zero level, the rate on deposits — at minus 0.4 percent, the marginal rate at 0.25%.
Remained unchanged and the program of “quantitative easing” (QE) monthly purchase debt Adjuster bonds with an investment rating, which at the meeting March 10 was increased from €60 billion to €80 billion.
On the 10 March meeting, the ECB lowered rates and increased quantitative easing on the background of deflationary risks in the Eurozone. In this way the regulator hopes to spur European growth and accelerate inflation to an acceptable for the developed economies at the level of 2%.
The market expected that key indicators will remain unchanged. Now analysts will wait for the press conference of the ECB head Mario Draghi in which he, presumably, will announce the forecasts for inflation and growth of the European economy.
The Eurozone economy is experiencing the best period since the start of the global financial crisis: GDP growth in the first quarter exceeded the forecasts, oil prices have almost doubled since the beginning of January, investment increased. According to most analysts surveyed by Bloomberg, the forecast for inflation will remain at or may be revised upward. Societe Generale analysts also do not exclude the increase of the forecast. The increase in the forecast is a positive step, despite the persistence of negative risks and a readiness to apply new stimulus measures. Analyst at Danske Bank Pernille, Bomholt, Henneberg expects to improve the Outlook on consumer inflation in 2016-2017 due to rising prices for oil and food, but, in her opinion, “the forecast for core inflation will be revised downward throughout the forecast horizon”.
Investors also expect to get new details about the program of buying up of corporate bonds regulator, which will start in June 2016, and Draghi’s opinion about the securities of Greece. On the eve of the meeting, the yield on Greek five-year government bonds remained at the level of 7.57%, near a six-month low of 6.95% at the end of may, and below 11.44% to the conclusion of an agreement with international creditors.
“After the introduction of the stimulus package on March 10 we believe that the ECB has done with this and will not expand the QE policy in the coming months”, — quotes Reinhard believes Cluse, an economist at UBS.
Ahead of the meeting on the background on the background of investors ‘ expectations of the outcome of the ECB meeting and the meeting of OPEC in Vienna key stock indexes in Europe show a negative trend for the third consecutive day. Following the session, June 1, the key index of great Britain FTSE 100 was down 0.62% to 6191,93 points, French CAC 40 — on 0,67%, to 4475,39 points, and German DAX — on 0,57%, to 10 204,44 points. Regional index STXE 600 fell 1% to 344,12 points.
As of 11:25 GMT 2 Jun CAC 40 fell by 0.27%, to 4463,32 points, German DAX — on 0,39%, to 10164,93 points, while British FTSE 100 rose 0.14% to 6200,78 points.
European indices decline inhibits the growth of prices for oil which rises in price on average by less than 1 percent. It is influenced by the statements of OPEC representatives during the meeting of member countries of the organization. The oil Minister of Saudi Arabia Khalid al-falih said that Riyadh wants to avoid shock on the market and ready to reduce the volume of production. However, experts believe that the agreement on the reduction of the level of oil production at the meeting will not be achieved.