ECB interest rate decision 0.15% vs 0.1% expected

depo rate to -0.1 %

Headline up on BBG saying that they will announce further policy decisions later

• reparing ABS purchases
• Discontinue SMP sterilisation
• Target longer term loans
• Continue with full allotment
• Inflation expectation remain firmly anchored over medium term (this suggests that the staff projections didn’t throw up any shocks but we should here more soon)
• Key rates expected to remain at present levels for extended period
• Will act swiftly with further action if needed
• Negative rates will also apply to reserve holdings in excess of min reserve requirements
• Targeted long term loans (TLTRO’s) will be measured in terms of new loans minus redemptions
• Banks will be able to borrow 7% of total loans to Euro area
• Size of TLRTO is €400bn
• Two will be conducted in Sep and Dec 2014
• Interest rate to be fixed at refi rate +10bps
• ECB considering purchase of simple, transparent ABS securities
• Will extend existing eligibility to at least Sep 2018
• Fixed rate allotment extended until end of 2016
• GDP data confirms ongoing gradual recovery
• Surveys signal moderate growth in Q2
• Labour markets show further signs of improvement
• Projections lower 2014 GDP to 1.0% from 1.2% , raises 2015 to 1.7% from 1.5%, 2016 unch  at 1.8%