In its latest decision, the Governing Council of the European Central Bank opted to leave monetary policy unchanged, leaving the asset purchase program operating at the same pace while the benchmark rate was held at 0.00% and the deposit facility remained at -0.40%. While ECB President Mario Draghi made fewer comments on monetary policy during his press conference, he did focus on the banking system especially amid concerns that banks in Italy may be insolvent when considering balance sheets full of nonperforming loans. To this extent, Draghi reiterated the need to address the bad asset problem, giving merit to the idea of a public backstop, especially during conditions that are considered extraordinary. While Italian banking stocks responded to the calls, rallying to the upside, the Euro was unmoved by the comments, with the EURUSD pair ending the session just modestly higher after very little press conference volatility.
ECB Pauses on Policy
Daily Analysis - 22/07/2016