The European Central Bank maintained status quo on interest rates for a fourth consecutive month and said it is going to announce more policy measures shortly as markets hold breath to know the details of the widely expected massive quantitative easing plan.
The Governing Council, led by President Mario Draghi, held the refinancing rate at a record low 0.05 percent on Thursday, following the meeting in Frankfurt. The decision was in line with economists' expectations.
The bank also left the deposit rate unchanged at -0.20 percent and the marginal lending rate at 0.30 percent. The three main interest rates were lowered by 10 basis points in September.
"Further monetary policy measures will be communicated by the President," the bank said in a statement.
Draghi will hold his customary post-decision press conference at 8.30 am ET at ECB's new premises at Grossmarkhalle, the old wholesale market of the city.
He is expected to unveil a massive quantitative easing plan, widely seen to exceed EUR 1 trillion. The QE programme, which was initially seen to be around EUR 500-550 billion, could include buying government bonds despite strong criticism from Germany.
Reports citing ECB sources said the bank may opt to buy EUR 50 billion of bonds per month. The plan was also rumored to run through 2016.
His words will also be watched keenly for the ECB's determination in defending its inflation target and further details on the much-expected QE plan. He is also expected to reveal whether any stimulus decisions were unanimous or not and throw light on the debate that took place among members.
Starting this year, rate-setting sessions will be held every six weeks instead of once in a month. The next session is scheduled for March 5 in Cyprus.
The bank had also announced that it will release the minutes of the session starting with tomorrow's meeting. The accounts will be released four weeks after each meeting. They will not reveal the voting pattern.
Speculation of a full-blown QE programme has been high and prompted the Swiss National Bank last week to abandon its CHF-EUR floor and take its deposit rate deeper into negative territory.
The surprise SNB move whipped up the markets after the Swiss franc surged more than 30 percent against the euro.
Subsequently, the Danish central bank also came under pressure and slashed interest rates this week to equal ECB's rates in response to the steady upward pressure on the Danish krone. However, Denmark retained the krone's peg to the euro that has been in place since the launch of the single currency.
Further, QE hopes were strengthened after ECB's earlier bond-buying programme known as the Outright Monetary Transactions (OMT) won a crucial legal backing from the top EU court last Wednesday.
Meanwhile, the Greece election on January 25 casts a cloud. The anti-austerity Syriza party has maintained a lead in the polls and plans to seek debt renegotiation if it comes to power.
Rumors have been rife regarding the size of the QE. Last week, ECB Executive Board member Benoit Coeure said quantitative easing should be big to be efficient. He also said the bank will consider the U.S. and British experiences to determine the amount of bonds to buy in order to restore confidence in the inflation target.
The ECB aims to keep euro area inflation 'below, but close to 2 percent'. Economists reckon that a QE programme of at least EUR 700 billion is needed to achieve the ECB's goal of boosting its balance sheet size back to EUR 3 trillion.
Eurozone inflation turned negative in December for the first time in more than five years in December with consumer prices falling 0.2 percent. Falling oil prices are set to make the picture murkier.
Regarding the composition of the ECB plan, economists listed some available options to the bank. According to them, the bank may opt to restrict purchases to investment grade bonds, which would make it immune to any impact from Greece election.
Another option reported in the press suggests a restriction on risk-sharing under which some asset purchases will be done by national central banks rather than the ECB. The size of such purchases will be relative to the national central banks' share of the ECB capital key or equivalent to the country's share of euro area GDP.
Economists warn such an approach could give a poor signal regarding single monetary policy, sparking fears of disunion.
"The positive impact even of a big programme could be diluted if, as mooted, the risks associated with the purchases remain with the national central banks, notionally eliminating "risk sharing"," Capital Economics' economist Jonathan Loynes said.
"It is worth remembering that the international experience of QE has been mixed at best and that there are reasons - not least the weakness of the banking system and already low levels of bond yields - to think that it might be less effective in the euro-zone than elsewhere. In short, QE is coming but don't expect it to cure all of the currency union's troubles."
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May 01, 2026 15:54 ET Central banks dominated the economics news flow this week with almost all major ones announcing their latest policy decisions and many boosted expectations for a rate hike in June. In other news, several countries released the preliminary data for first quarter economic growth. In the U.S., comments by Fed Chair Jerome Powell were also in focus as his term ends this month.