10/03/2017 - ECB Keep Interest Rates On Hold

EUR

The European Central Bank yesterday announced that they had decided to keep interest rates on hold, despite Eurozone inflation reaching its 2% target in February. The bank’s inflation forecasts have increased for all of 2017, but remain below 2% for the next two years.
 
ECB President Mario Draghi said he is no longer concerned about deflation, but still thinks accommodative monetary policy is needed. The Central Bank confirmed that would continue with its asset-buying programme until at least the end of this year, keeping the same rate of asset purchases announced in January, with the monthly rate due to come down from 80 billion euros to 60 billion euros in April.
 
When questioned about increasing concern regarding the future of the Eurozone, Draghi dismissed the suggestion that he might be feeling nervous about upcoming elections in key EU countries. In what seemed an effort to reassure investors, Draghi insisted that the euro is "here to stay" and indicated that although he will pay a lot of attention to political events in Europe, he is not concerned. General elections are due to be held in France and Germany later this year, and the Netherlands is due to elect a new premier next week.
 
Regarding Brexit, Draghi said that so far this has not had a significant impact and the consequences have not yet been seen.

GBP

Scottish First Minister Nicola Sturgeon has said that Scotland could hold an independence referendum in the Autumn of 2018, just months before Britain is due to leave the EU. The prospect of this adds to the complexity of Brexit negotiations, and puts further pressure on Theresa May. A new poll released yesterday showed that among those Scots likely to vote, support for independence had risen to 50 percent. Under the UK's constitutional conventions, an independence vote would have to be approved by May's government which yesterday repeated that it saw no need for a second ballot. Sturgeon however has said that the vote is necessary due to changing circumstances since 2014.

Key Announcements

09:30 – GBP : Manufacturing Production m/m, expected at -0.6% against a previous of 2.1%

13:30 – USD : Average Hourly Earnings m/m, expected at 0.3% against a previous of 0.1%

13:30 – USD : Non-Farm Employment Change, expected at 185K against a previous of 227K

13:30 – USD : Unemployment Rate, expected at 4.7% against a previous of 4.8%
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