ECB interest rate decision: live

They expects the ECB to:

• Cut the refi- or refinancing rate - and the deposit rate to +10 basis points and -10 basis points respectively, with a view of capping the exchange rate appreciation

• Announce a term funding scheme that would differ from the previous LTROs: it would be conditional on lending, the rate would be fixed, it would be open over a definite period... This would be an announcement of liquidity but the implemented liquidity injection would actually take weeks if not months to materialise given the conditionality

• Overall, we think markets may cheer up on Draghi communication, then deflate a little bit when markets realise the liquidity is not out there yet

12.15 Capital Economics give their analysis on the Bank of England's interest rate decision:

While the strength of the economic recovery may have pushed one or two MPC members closer to voting to raise interest rates at today’s meeting, we still think that the benign inflation outlook and a cooling of the housing market will persuade most members to keep rates on hold well into 2015

12.10 Commenting on the Bank of England's decision on interest rates, Reuters say:

The Bank of England stuck to its plan to nurse the economy back to full health with record low interest rates on Thursday, despite strong growth and fast-rising house prices.

As widely expected, the Bank's Monetary Policy Committee left its benchmark interest rate at 0.5 percent, its level since the worst of the financial crisis more than five years ago.

12.00 The Bank of England has kept its interest rate at a record low of 0.5pc despite strong growth and a hot housing market

^{The Bank of England}

11.58 Let's hear from some of the analysts.

Chris Williamson, chief economist at Markit, said last night:

Despite falling, the Eurozone PMI remains firmly in expansion territory and consistent with GDP rising by a reasonable 0.4pc in the second quarter.

Although the eurozone is enjoying its best performance for three years, this is an uneven, stuttering and lacklustre recovery.

Capital Economics warned this week:

There is a real and growing danger that the euro-zone enters a Japanese-style bout of flat or falling prices. But even a prolonged period of low positive inflation would seriously hamper the peripheral countries’ efforts to restore their public finances to health.

Kathleen Brooks of forex.com said on Wednesday:

It feels like Christmas Eve just without the mince pies, in dealing rooms across the globe.

The ECB President’s oratory has worked magic in the past, however, with so much expected from this meeting, swathes of the market now expect the ECB to disappoint...

However, we can never rule out a surprise from Draghi, and if the inflation outlook is deemed weak enough to justify QE then the euro could go into free-fall, particularly against the dollar and the pound.

11.55 Earlier this morning, the euro was strengthening against the pound but was weaker against the dollar.

^{Euro strengthens against the pound in early trading. Graph: Bloomberg}

^{Euro is weaker against the dollar in early trading. Graph: Bloomberg}

1.45am. Good morning and welcome to the live blog. Today Mario Draghi will make his much anticipated announcement about the European Central Bank's interest rates at 12.45pm and then explain his actions - or inaction - at 1.30pm.

Analysts speculate that he will impose negative interest rates on overnight depositors, hoping to spur banks into lending instead and to prevent the eurozone slipping into deflation.

The Bank of England will also announce its interest rates at 12 midday.

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