• The European Central Bank is expected to cut benchmark interest rates by 25 bps at the October policy meeting.
• ECB President Christine Lagarde’s presser will be closely scrutinized for fresh policy cues.
• The ECB policy announcements are set to inject volatility around the EUR/USD pair.

The European Central Bank (ECB) interest rate decision will be announced following the October monetary policy meeting at 12:15 GMT on Thursday.

ECB President Christine Lagarde's press conference will follow, beginning at 12:45 GMT, where she will deliver the prepared statement on monetary policy and respond to media questions. The ECB announcements are likely to ramp up the Euro (EUR) volatility.

What to expect from the European Central Bank interest rate decision?

Following the September policy meeting, the ECB decided to lower the interest rate on the marginal lending facility to 3.9% from 4.5% and the deposit facility, also known as the benchmark interest rate, by 25 basis points (bps) to 3.5%. The ECB also cut the interest rate on the main refinancing operations by 60 bps to 3.65%.

The ECB is widely expected to lower the deposit facility rate by another 25 bps to 3.25% after the October meeting. 

In the post-meeting press conference, President Lagarde refrained from offering any clues regarding the timing of the next rate cut, saying that there was a relatively short time to the October meeting and adding that they have no commitment of any kind. 

However, after the data published by Eurostat showed that the annual Harmonized Index of Consumer Prices (HICP) softened to 1.8% in September from 2.2% in August, investors started to lean toward an additional policy-easing step in October.