ECB meeting in focus

The main event this week is without doubt the monetary policy meeting at the European Central Bank (ECB). There is no room to move on interest rates because we are at the lower bound but we can expect the so-called “detailed modalities” of Draghi’s plan to buy “simple and transparent asset-backed securities (ABSs)”. In his press conference following the announcement Draghi can expect to be grilled on whether his package of measures will really be enough to boost the ailing Eurozone economy.  In particular focus will be the failure of the first of his “targeted longer-term refinancing operations (TLTROs)” with banks only taking up €83 billion of a €400 billion allotment of 4 year funding at 0.15%. The poor take-up of almost free money is either a damning reflection of the lack of demand in the Eurozone economy or a banking system that is still on life support. Those hoping for the immediate answer from Super Mario will be disappointed.