Two issues are paramount: Will they make reference to a cut in the main refinacing rate, which now sits at 0.75%? Last month it was believed that a majority of the governing council wanted to cut but the Germans cautioned against it. The data over the last month have remained soft but have not accelerated to the downside, so there may not be a sense of urgency, at the moment.
The other big issue is whether or not the governing council is willing to cut the rate paid on excess reserves to below zero. Draghi said that issue was not discussed in depth at the December meeting. If it is discussed in depth this month, odds are the euro will weaken in anticipation of such a cut before too long.
Expect the usual verbiage that it is up to Spain to decide if they need a bailout from the ECB via Open Market Transactions. (OMT).
