*** ECB Watch: ECB Cuts Rates Less than Expected. What Else? ***
For the benefit of everyone, some additional colour
First, on the reduction in marginal lending rate by 35 bp. This is mainly relevant for banks in stress. Only for banks that are stuck emergency liquidity assistance (ELA) which is priced off the marginal lending rate will benefit from the larger cut in the top rate. On Greece and Cyprus still have meaningful amounts of ELA. page 18 of the LDT linked below. Everyone else pays the refi rate or will get charged at the depo rate for depositing money at the ECB. The marginal lending rate also provides the upper limit for EONIA.
Second on the additional info to be released by the ECB at 14.30 Ldn time. The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today. Further monetary policy measures to enhance the functioning of the monetary policy transmission mechanism will be communicated in a press release to be published at 3.30 p.m. CET today. This means that at the end of the press conference, there will be an additional press release detailing these measures. As I said, the devil is in the detail, esp. for credit easing. In my view, the reason they are mentioning this is that they know 10 bp will be at the lower end of what the mkt was looking for.