European Central Bank decision today

This lunch time sees the monthly European Central Bank decision on monetary policy. Interest rates in the single currency zone have been at historic lows of 0.25% for much of the time since the economic crisis, but lower inflation (0.5% in March) which has been below the ECB’s ‘danger zone’ of 1% for 6 months, may force Mario Draghi to announce a negative deposit rate or further bond-buying at 12.45. While the decision hangs in the balance, any such action would be likely to weaken the Euro and improve rates for those of you making Euro payments. 

Mario Draghi, the Bank’s President, has said he is ready to take bold action to stave off the threat of deflation. Of course the risk the other side, if no action is taken, is that we could see the Euro gain in value as markets absorb interest rates staying as they are. It is worth noting Mr Draghi’s press conference, given straight after the decisions, also has the potential to cause Euro volatility.

The Bank of England rate decisions are made next Thursday. Aside from some US manufacturing figures this afternoon, there is no other major data due out so the Eurozone is likely to be the focus for markets.