The European Central Bank is expected to leave rates at an historic low of 0.5 per cent and to signal that it is in no rush to raise the cost of money, despite subdued inflation and a pick-up in economic growth in the euro zone.
Market expectations of higher interest rates are likely to force ECB chief Mario Draghi to use his press conference today to restate the ECB’s commitment to keep rates at their present or lower levels for an extended period under the bank’s new forward guidance policy.
This comes after the ECB took the unprecedented step in July of abandoning its tradition of “never pre-committing” on interest rates.
Draghi is also set to unveil at his monthly press conference, which will follow the bank’s governing council’s meeting, the ECB’s latest so-called staff projections on growth and inflation.
Analysts expect the projections will essentially confirm the bank’s previous forecasts of a moderate rise in economic growth in the coming months combined with a weak inflation outlook.
The 17-member euro zone exited recession in the three months ended June to grow by 0.3 per cent quarter-on-quarter, European Union’s statistics office Eurostat had said on Wednesday.