BoE, ECB To Keep Monetary Policies Unchanged

BoE, ECB To Keep Monetary Policies Unchanged

With President Barak Obama winning against his Republican rival Mitt Romney late Tuesday night, focus steers toward Europe. First, markets passed the Greek austerity bill test, and now Europe’s two giant banks prepare to announce monetary policies, expected unchanged.

The market survived the anxiety of the Greek vote, and after riots and tension in the debt-laden nation. The Greek parliament passed the €13.5 billion by a thin 153 votes in the 300 seats parliament and the fading support behind the coalition government forced the PASOK and New Democracy to expel seven deputies for not backing the measures!

With one test passed, the other now is still on Europe and on policy markets. The focus turns to the United Kingdom and the MPC decision whether an increase in APF will be announced, and then to the ECB and whether Draghi will take it a notch further and actually cut rates!

Investors' closely monitor the European Central Bank impatiently as it is set to leave benchmark interest rate unchanged on Thursday at 0.75%, following July's cut. The bank is also expected to hold its deposit rate at zero and refinancing rate at 1.50%.

Despite the poor outlook for a rate cut today, the option remains on the table for Draghi to take rates to a historic-record low at 0.50% and will not come as a surprise, specifically when considering current Eurozone economic circumstances. The 17-economy bloc contracted by 0.2% in the second quarter of 2012 and likely continued to contract into the third quarter.

The Eurozone is suffering an obvious retraction in various economic sectors; services and manufacturing sectors experienced a nine-month consecutive contraction this October.