ECB Minimum Bid Rate Actual 2.00%, Expected 2.00%, Previous 2.00%
Release Explanation: This is the Interbank overnight lending rate. It sets the tone for mortgages, commercial loans, and all economic lending criteria. An increase in Interest Rate will have the effect of slowing economic growth. A decrease in Interest Rate is used by a Central Bank to stimulate economic.
Trade Desk Thoughts: The ECB maintained the Minimum Bid Rate at 2.00%, the lowest rate seen at the European bank in the last few years. This comes, after Mr. Trichet said in his last press conference that the next important meeting is in March.
The market will now shift its focus to Mr. Trichet's press conference, which starts approximately 45 minutes after the interest rate decision. It is expected that the President of the ECB will assess the downside risk, while saying that the bank may take steps that are more cautious in the future. Currently, the Euro-zone economy is in a recession, with analysts estimating a recovery might be likely in the second part of 2009, or beyond. Previously, ECB members have appeared reluctant to reduce the overnight rate too much, as it might spur inter-banking lending.
Forex Technical Reaction: The euro made a 20-pip spike at the time of the news release but the pair continues to trade within the same range, unable to move decisively in either direction.