The European Central Bank left eurozone interest rates on hold at 1.0 per cent on Thursday.
As Barclays Capital’s Julian Callow summed it up (our emphasis):
No surprises there, and so attention switches to the press conference, due at 1.30pm London time. We would not expect any significant deviation from the Council’s previous assessment on the economic and inflation outlook (while the Council is likely to be positively surprised by the sharply reduced bidding by banks at the end-March 6m LTRO); hence the event is likely to be dominated by developments in Greece and the new system of gradated haircuts on collateral (which ECB President Trichet has already said will be unveiled today).
The new system is likely to resemble the Fed’s model. Mr Trichet has also said that the ECB will continue to accept securities with a minimum BBB- (or equivalent) rating “beyond the end of 2010″ (25 March), rather than reverting, as it had previously signalled, back to the ‘standard’ procedure of a minimum A- rating from at least one rating agency.
All eyes on Jean-Claude Trichet’s press conference then, which is due to start at 1:30pm UK time.
Related links:
‘This might just be one of the most important communications by the ECB in its short existence’ - FT Alphaville
My Big Fat Greek Collateral Conversion – FT Alphaville