ECB’s Interest Rate Policy Steady, Euro Strengthens vs Greenback - 2.8.2012
European Central Bank kept its Refinancing Rate at 0.75 per cent after July’s decision to lower Refinancing Rate by 25 basis points. ECB’s president Mario Draghi reported the previous week that will do whatever it takes to support the Euro, therefore investors are well anticipating ECBs press conference coming a while after the interest rates announcement.
Moreover, investors are speculating that ECB would start again the LTRO (Long-Term Refinancing Operations) by buying Spanish and Italian sovereign bonds to reduce borrowing costs. The Euro rose versus the US dollar after the rates announcement from 1.2264 to 1.2300, closer to the recent high at 1.2388. Lastly, ECB left the marginal lending facility rate at 1.50 per cent and the interest rate on its deposit facility at 0.00 per cent.