The ECB's governing council voted to hold the benchmark "refi"
Frankfurt - AFP
The European Central Bank held its key interest rates steady, as expected, on Wednesday, but investors were listening for what ECB chief Mario Draghi had to say about Greece.
The ECB voted to hold the benchmark "refi" refinancing rate steady at its current all-time low of 0.05 percent, a central bank spokesman said.
The two other key rates -- on the deposit and marginal lending facilities -- were also unchanged at -0.2 percent and +0.3 percent, respectively.
But since no policy changes had been expected anyway, financial markets were instead focused on a scheduled meeting between Greek Prime Minister Alexis Tsipras and EU Commission president Jean-Claude Juncker in the Belgian capital on Wednesday evening.
"The ECB was never likely to announce any policy changes at its meeting today... potentially more interesting though will be anything Draghi will have to say on Greece," said Capital Economics economist Jonathan Loynes.
Greece and its international creditors have exchanged proposals to reach a deal to unlock 7.2 billion euros ($8 billion) to help Athens make a critical repayment on Friday. But months of fractious talks have been deadlocked over creditors' insistence that Athens undertake greater reforms which Greece's anti-austerity government has refused to match.
There are fears that Greece could default, possibly setting off a chain reaction that could end with a messy exit from the eurozone.
Draghi attended a meeting of finance ministers and central bank governors of the Group of Seven wealthiest countries in Dresden last week, where efforts to hammer out a deal and prevent a disastrous Greek exit from the eurozone took centre stage.
He also took part in a late-night meeting in Berlin with German Chancellor Angela Merkel, French President Francois Hollande and EU Commission chief Juncker on Monday.
Loynes said markets would focus on any comments from Draghi on "the proposal supposedly put together" at the Berlin meeting.
"We suspect that he will give little away. But any hints that the ECB is losing patience with the process will further underline the importance that the various parties reach some sort of an agreement very soon," the expert said.
- QE in focus -
Among the other issues likely to feature in Draghi's customary post-meeting news conference were the latest economic data and the perceived effectiveness of the ECB's recent raft of policy measures, analysts said.
In March, the ECB embarked on a programme of so-called quantitative easing, or QE, buying up 1.14 trillion euros in assets -- at a rate of 60 billion euros per month -- until September 2016.
The aim is to inject liquidity into the financial system and push up the eurozone's chronically low rate of inflation.
Executive board member Benoit Coeure caused a stir two weeks ago when he announced that the ECB could "frontload" -- or temporarily ramp up -- the purchases prior to the summer drop-off in liquidity.
And Draghi could hint at even more frontloading if the underlying macroeconomic backdrop justified it, analysts said.
According to the minutes of the governing council's last meeting in April, while the central bank chiefs saw a case for "guarded optimism on the short to medium-term outlook for the euro area economy," they still felt it was important "to remain cautious" given the prevailing economic headwinds.
Hence, there is no talk of scaling back QE just yet.
- New economic forecasts -
The ECB will publish its latest updated forecasts for growth and inflation in the 19 countries that share the euro.
According to the ECB's latest projections published in March, eurozone growth was expected to reach 1.5 percent in 2015, 1.9 percent in 2016 and 2.1 percent in 2017.
But with the single currency area growing by only 0.4 percent in the first three months of 2015, those forecasts could come under pressure or, at best, be left unchanged, analysts said.
Berenberg Bank economist Christian Schulz said he expected Draghi "to take a cautious tone on the economic outlook, offer a clear commitment to continuing quantitative easing at least until September 2016 and warn governments on structural reforms."