Forex News – ECB leaves rate unchanged at 1 percent

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The European Central Bank announced its decision today to leave its benchmark interest rate at 1 percent as widely expected.

The focus now turns to ECB President Mario Draghi’s monthly news conference at 13:30 GMT when markets will be looking out for any signs that the central bank will help Greece.

However since Greek leaders failed to reach an agreement on a bailout deal before the ECB meeting today, Draghi may say little on what, if anything, the ECB is ready to do.

Also, the ECB is more or less restricted by the Maastricht Treaty, which forbids the central bank from financing governments.

It is expected that during the news conference, Draghi will probably be asked if the ECB is willing to forgo some profits on its holdings of Greek debt as part of a broader agreement to ease the country’s debt burden.

Some ECB policymakers are reluctant for the bank to show a willingness to share in the restructuring burden for fear of easing the pressure on Athens to agree spending cuts.

Euro was little changed against the dollar after the rate announcement as this was already priced in. EURUSD traded at 1.3243 at 12:45 GMY at the time of the news, then edged up to 1.3275 by 13:10 GMT.