Here’s Mario Draghi at his poetic monetary policy best:

Here are those growth projections in handy visual form. It does not spell a pretty picture for this year in the Eurozone.

Pushing on a string? That’s the verdict of Nick Wall, co-manager of a bond investment fund at Merian Global Investors.

He said: “As growth cools, the ECB is taking no chances with the banking system by offering cheap liquidity until 2023.

This helps at the margins by keeping the cost of credit cheap, but the issue in Europe has been demand for credit. For money demand to increase, Europe will be looking for an upswing in Chinese growth to boost its exports and for governments to boost spending. An increase in consumer confidence would also reduce the savings rate that picked up following a turbulent fourth quarter of 2018.

The ECB is doing all it can within its legal framework to keep money cheap, but until the demand for money picks up meaningfully, it will be pushing on a string.

European bank shares have not taken to the ECB’s announcement particularly well, despite the promise of more cheap funding.

The eurozone banks index is down by 3.9%, which would be its worst day of the year so far.

Mario Draghi has now finished speaking in Frankfurt.

In truth, the major action was probably at the announcement itself, in which the ECB surprised observers.

Andrew Kenningham, chief Europe economist at Capital Economics, a consultancy, said: “The ECB surpassed expectations today by announcing a third round of TLTROs and more dovish rate guidance.”

We doubt, however, that the new measures will be enough to reverse the economic slowdown.

An interesting answer on what the main underlying causes of the slowdown seen by the ECB in Europe.

It’s a mixture of internal and external factors for the EU, Draghi said. The external slowdown was “mostly the slowdown in world trade”, with China, some emerging markets, and a “potential slowdown” in the US at issue.

As well as actual trade-restrictive measures, an important factor is “lower confidence produced by the trade... discussions – let’s call it this way”, Draghi said.

Inside the EU the car industry has suffered well documented issues, but uncertainty in Italy (which is in recession) has also weighed on activity.

As ever, it’s a tricky rhetorical path that Draghi must tread.

The ECB may have cut its growth outlook and given banks cheap funding, but using the central bank’s biggest monetary policy tool, quantitative easing, was not at issue this week, Draghi said.

When the ECB announced the December end of its quantitative easing programme it left the door open to returning to it if necessary. Not yet, though. He said:

There was no discussion about quantitative easing. Not at all.

Asked about whether giving an effective subsidy to banks, in the form of cheap lending, at a time when big bonuses are still being paid out, Draghi defended the policy.

If it were not a subsidy no banks would take it up, making it useless as a monetary policy tool, Draghi said.

Draghi chuckled when asked about the fact that he will never raise rates as ECB president.

It’s not me. It’s the [rate-setting] governing council. But I have no comments to make.

Jasper Jolly taking over here from Julia Kollewe.

Some early reaction from economists, with Draghi still speaking.

Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics, said: “This is about as dovish as anyone could have expected.”

Extending the guidance on the next rate hike to the end of the year and announcing the TLTROs earlier than expected both reinforce concerns on growth from the ECB. The former is surprising, said Vistesen.

We are a bit surprised by this because this commits the new ECB president and governing council not to move on rates after Mr Draghi leaves in October*.

*corrected from original, which stated that Draghi will leave in September.

You can read Mario Draghi’s introductory remarks here.

German bond yields are also down on the ECB’s new GDP and inflation forecasts.

The euro fell to a new session low of $1.1254, down 0.5% on the day, after Draghi announced a sharp downgrade to this year’s growth outlook. Southern European bond yields extended falls, some to levels not seen since 1999.

Several analysts are saying the ECB’s policy decision today proves that is ahead of the curve, for once.

Seema Shah, senior global investment strategist at Principal Global Investors, says.

For one of the first times in its short life, the ECB has been pre-emptive rather than reactive. By announcing new liquidity operations earlier than the market was anticipating, the ECB has moved ahead of the curve and provided strong reassurance to the banking sector – and to the real economy to some extent – that it will provide support if required. Admittedly, these TLTROs themselves are unlikely to provide strong stimulus, but demonstrating its intent to act is half the job done.

In addition, the ECB provided forward guidance on policy rates through the end of 2019. With the ECB deposit rate in negative territory, further rate cuts were out of the question. The inability to pass on the negative rates to depositors means that banks net interest margins get squeezed when they deposit excess reserves at the ECB, cutting away at profitability, capital and their ability to lend. No wonder then that negative rates have been drawing criticism from banks across Northern Europe and the ECB has, if anything, been receiving calls for rate hikes.

Unfortunately, given the economic weakness facing the euro area, rate hikes are also impossible. The ECB’s hands are tied when it comes to conventional monetary policy and the best it could have come up with was exactly what it delivered. Already the market has moved to price in unchanged interest rates through 2019 and into the early part of 2020.

All members of the ECB governing council still think the probabilities of a recession are low, the ECB chief said, reiterating that financing conditions has eased further.

He said this year’s growth forecast had been revised down “quite significantly” because we are “in a period of continued weakness and pervasive uncertainty”.

Draghi said financing conditions had “even eased since the last meeting”.

Here are some more introductory remarks from Draghi at the ECB press conference.

While there are signs that some of the idiosyncratic domestic factors dampening growth are starting to fade, the weakening in economic data points to a sizeable moderation in the pace of the economic expansion that will extend into the current year.

The weaker economic momentum is slowing the adjustment of inflation towards our aim.

The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment. Moreover, underlying inflation continues to be muted.

Mario Draghi is speaking at the ECB’s press conference.

Further details on TLTRO will be given “in due course”, Draghi said.

“The operation will help to preserve favourable bank lending conditions,” he added.

There has been a “moderation in the pace of the economic expansion”, Draghi said, explaining the more dovish guidance on the future path of interest rates.

You can read the full ECB announcement here.

In just over five minutes, ECB president Mario Draghi and vice-president Luis de Guindos will take questions from journalists and explain the central bank’s latest measures. You can watch the press conference live here.

In his opening remarks, Draghi is also expected to announce the bank’s latest growth and inflation forecasts. In December, it was predicting GDP growth of 1.7% for this year and next, and 1.5% for 2021.

The euro keeps falling after the ECB announcement, and is now down 0.4% at $1.1266.

Naeem Aslam, chief market analyst at ThinkMarkets, says:

ECB delivered fireworks: a new series of TLTROs. Basically acknowledging the slow growth in the eurozone. This announcement made traders go wild and this pushed the euro-dollar price lower. All eyes will be on Draghi and markets are going to be even more brutal if he delivers any more surprise in his statement. This is because the overnight volatility for euro-dollar pair shows that when traders are not expecting any surprise, and the policymakers play against the odds, the reaction is more ruthless.

A sign of panic or an attempt to get ahead of the curve? asks Carsten Brzeski, chief economist at ING Germany. The ECB surprised almost everyone by announcing a new series of measures, trying to avoid an unwarranted tightening of its monetary stance.

He writes:

What did the ECB announce?

• A change in forward guidance on rates to, “interest rates to remain at their present levels at least through the end of 2019”, from “through the summer of 2019”.
• A new targeted longer-term refinancing operation (TLTRO) with a quarterly frequency from September 2019 until March 2021, at the refi rate and no longer at the deposit rate.

What does this mean?

The press conference will hopefully shed some more light on the reasons for the ECB’s decision. Or better, the timing of the ECB’s decision. The measures, as such, are not a major surprise but the moment of the announcement is. In our view, it is clearly an attempt to stay ahead of the curve and to avoid unwarranted tightening of the ECB’s monetary stance. It is not an attempt to provide more easing. At the same time, however, it is also a bit of a gamble as any next step from here to tackle a severe downswing of the economy would now require unprecedented measures.

The euro has dropped while bank stocks have risen on news of the ECB’s new lending operation and its guidance that there won’t be an interest rate hike this year.

This means that Mario Draghi will leave the ECB in the autumn without ever raising rates.

In its forward guidance on interest rates, the ECB said:

The governing council now expects the key ECB interest rates to remain at their present levels at least through the end of 2019, and in any case for as long as necessary to ensure the continued sustained convergence of inflation to levels that are below, but close to, 2% over the medium term.

While we are waiting for the ECB, a tweet from Liam Fox reveals that he doesn’t know what WTO stands for – it stands for World Trade Organization, in case you are wondering. The UK’s international trade secretary is in Switzerland, visiting the Geneva-based organisation.

And over in the US, as Donald Trump shook hands with the Apple CEO, Tim Cook, he called him “Tim Apple” during a meeting at the White House yesterday.

Didier Borowski, head of macroeconomic research at Amundi, Europe’s largest fund manager with €1.45 trillion of assets under management, has also shared his thoughts on what to expect.

Given the uncertain environment, the ECB should keep its assessment on risks unchanged and, in addition, announce new TLTROs (it would be the third wave of TLTROs, the first wave ... was announced in March 2016) to alleviate the burden on the banking sector. This is widely expected and has been to some extent pre-announced in recent weeks. However, the modus operandi is still in question.

Regarding interest rates, the ECB will likely change its forward guidance. But the ECB may want at the same time to maintain the door open to a “normalisation” of its deposit rate which weighs on the profitability of the banking sector, in particular in the north of the Eurozone. Bringing it back to zero at some point remains an objective for the ECB, in particular if the base scenario is confirmed in H2. This is all the more true that certain studies indicate that maintaining negative interest too long could prove counterproductive for the banking sector, impairing the credit channel and thus arming the economy.

He said the recent remarks from the Governor of the Bank of France, François Villeroy de Galhau – a possible candidate to succeed Mario Draghi as ECB chief in the autumn – clearly confirm that the ECB is concerned about negative rates.

Some observers have concluded that the ECB can put in place a two-tiered deposit rate system: one that would apply to banks that have accumulated large excess reserves and that could be raised without inconvenience; while the other, for banks that are highly dependent on the liquidity of the ECB (in Southern Europe, especially Italy), would stay negative (but variable). The establishment of such a mechanism is or has likely been studied by the ECB. But in the current environment, it seems premature for the ECB to move in this direction.

David Kohl, chief currency strategist at Swiss private bank Julius Bär, has sent us his expectations for the ECB’s growth downgrade.

The updated growth projection for 2019 will be revised sharply down from the 1.7% published in December. We expect growth in the eurozone to slow to 1.2% in 2019. The possibilities to respond to slower growth with easier monetary policy are limited, as the main refinancing rate stands at 0% and the deposit rate is already negative, with -0.4%, and thus puts pressure on the bank’s profitability at this level.

The focus of attention is on the extension of long-term refinancing operations, which will start to expire next year and are a crucial so that banks fulfil the net stable funding requirements. We expect that an extension will be prepared at today’s meeting given the weaker growth outlook. Any additional dovish rhetoric, including an extension of the guidance on how long rates will remain unchanged, would be a dovish surprise and drive the EUR/USD faster towards our 3-month target of $1.10.

The ECB is expected to revise its growth expectations significantly down at today’s council meeting and to signal support for growth by extending the expiring long-term refinancing operations. Additional policy loosening would be a surprise and would put pressure on the EUR/USD.

The pound has lost 0.2% against the dollar and 0.3% against the euro – its losses a combination of Brexit anxiety and pre-ECB hope from its single currency rival, noted Connor Campbell, financial analyst at Spreadex.

He went on to say:

Though the slowdown is well-know at this point, the OECD’s forecasts for the eurozone were still troublesome on Wednesday. In response to the region’s economic issues, the ECB is expected to announce, or at least signal, that is prepping a fresh set of targeted longer-term refinancing operations in order to encourage bank lending.

Time for a look at the markets, ahead of the ECB’s policy decision at 12.45pm GMT and ECB chief Mario Draghi’s eagerly-awaited press conference at 1.30pm GMT.

Nearly all major European stock markets are down, with the exception of Spain’s Ibex, which has edged up some 11 points.

• UK’s FTSE 100 is down 0.45%
  
• Germany’s Dax is down 0.49%
  
• France’s CAC is down 0.4%
  
• Spain’s Ibex is up 0.12%
  
• Italy’s FTSE MiB is down 0.21%
  

The eurozone growth figures come ahead of the European Central Bank’s monthly meeting, where it is expected to leave interest rates unchanged. But markets will be looking for any additional measures the central bank is taking to revive the slowing economy, such as another round of cheap loans to banks.

ECB chief Mario Draghi is expected to announce sharp downgrades to the central bank’s growth and inflation forecasts when he begins his press conference at 1:30pm GMT.

Here is some reaction to the John Lewis staff bonus, the lowest in 66 years, following a slump in the retailer’s profits.

One member of staff seemed happy with the bonus.

Earlier, before the bonus figure was revealed, our retail correspondent Sarah Butler tweeted:

You can read the full speech here.

She also explained what was likely to happen after a smooth Brexit.

Following a smooth Brexit, sterling would be likely to appreciate. Potential supply will also be able to continue on its recent path, free of any immediate constraints. A stronger pound and continued supply growth would both limit the extent that a recovery in demand feeds through into inflationary pressures.

So while I still envisage that in the event of a smooth Brexit we will need a small amount of tightening over the next three years, before voting for any rate rises I would want to be confident that demand was growing faster than supply. As I have discussed today, to be most sure of that I would need to see an increase in domestic inflationary pressures.

Moreover, a more disorderly Brexit outcome could materially affect potential supply, which would call for a reassessment of how we expected the stars to evolve. The response of demand would depend crucially on how households, companies and markets react to the new supply potential. The exchange rate would be likely to depreciate and any increases in tariffs or nontariff costs would push up on prices.

As the MPC has long emphasised, the monetary policy response to such a scenario will depend on the balance of these effects on supply, demand and the exchange rate.

Here is more detail on the John Lewis results. It owns the upmarket grocer Waitrose, which has fared better because it did less discounting and spruced up its ranges. Operating profits rose 18% to £203.2m as profit margins improved and like-for-like sales grew 1.3% .

Waitrose launched more than 5,000 new or updated products including bigger ranges of vegetarian and vegan products – introducing Beetroot Wellington before Christmas.

However, profits slid by 56% to £114.7m at the John Lewis department stores because of weaker home furnishings sales, higher IT costs, new store openings and lower profit on asset sales.

Back to house prices, which jumped 5.9% on the month in February, according to the mortgage lender Halifax. It was the biggest monthly gain ever recorded and was partly caused by an increase in sales in south east England.

A spokeswoman explained:

It is the biggest we have recorded, but as always we’d caution against putting too much emphasis on the monthly figure as that is much more volatile. You’ll recall that January was a particularly weak month, so February is something of a correction.

Underlying that, we’ve been seeing an increase in sales in the south east which had been more subdued in recent months. This has played a part in the movement given the importance of the region.

John Lewis has set out its preparations for Brexit, with the official departure date of 29 March just three weeks away.

We have been preparing for the operational implications of Brexit for well over a year, and are in a good position for a managed transition. This covers currency, tariffs, customs and labour.

The main risk in an unmanaged transition is a strong fall in consumer confidence and the impact that has on trade. Given the current level of uncertainty, we expect 2019 trading conditions to remain challenging. We have built up a strong liquidity position at nearly £1.5bn so that we have the financial headroom to mitigate the risks and make sure we can continue investing for the future.

John Lewis later clarified that the £1.5bn is mostly made up of cash that it is setting aside to prepare for a hard Brexit (£982m), along with £500m in lending facilities.

The staff bonus – which at 3% of salary is the lowest in 66 years – has cost John Lewis £44.7m, compared with £74m the previous year.

All partners, from leading executives to Saturday shelf-stackers, receive the same percentage bonus.

You can read our full story here:

He said there had been “near constant discounting” since October in many areas, to draw in reluctant shoppers:

The market context continues to be challenging. That’s evident in our results, especially in John Lewis & Partners, where we saw near constant discounting across many categories from October onwards in response to the combination of subdued demand, excess retail space and some other retailers’ distress.

Near-term uncertainty, politically and in the economy, is having a major impact on consumer confidence, but we do not believe the market conditions are cyclical. The disruption we have seen on the High Street, including business failures and renewed interest in mergers and acquisitions, are instead signs of an inevitable market adjustment which will require greater clarity on whether brands are competing on scale or difference.

Sir Charlie Mayfield, partner and chairman of the John Lewis Partnership, said:

In line with expectations set out in June, our partnership profits before exceptionals have finished substantially lower in what has been a challenging year, particularly in non-food.

Philip Hammond, the UK chancellor, said this morning that Britain will probably have to delay its departure from the EU if MPs reject the government’s proposed divorce deal next week.

He told BBC radio:

The government is very clear where the will of parliament is on this. Parliament will vote not to leave the European Union without a deal. I have a high degree of confidence about that.

Jeremy Leaf, a north London estate agent and a former RICS residential chairman, says about the house price increases reported by Halifax:

Transaction numbers [are] keeping up with the five-year average but there is no doubt that the shortage of supply is a significant factor in the uplift.

The reasons behind it are certainly not just to do with Brexit as we consistently hear on the doorsteps - affordability and tough lending criteria as other factors. Local factors are also highly relevant and activity varies quite a bit from area to area.

Looking forward, we expect to see more of the same and hopefully a more balanced market, particularly if negotiations on EU withdrawal begin to make some progress.

Stock markets are falling as the global mood sours while sterling remains “stoic,” says Connor Campbell, financial analyst at Spreadex.

Following in the footsteps of the Dow Jones – which has had a terrible start to March as investors clamour for concrete US-China trade war progress – the European markets slumped their way through Thursday’s open.

With some big names – Rio Tinto, BHP Group, Persimmon, Standard Chartered and RSA Insurance – going ex-dividend, and the general mood dour, the FTSE didn’t stand a chance. Luckily for the index, it has tended outperformed its peers in the last week or so, meaning its half a percent decline still leaves it up on the month so far.

As for the pound, it was once again (relatively) stoic in the face of the fractured Brexit landscape. The EU has reportedly given the UK ’48 hours’ to offer a Brexit solution if an altered deal is to be worked out in time for the promised ‘meaningful’ vote next Tuesday. The currency slipped 0.1% against both the dollar and the euro, noticeably off where it ended February – especially versus the greenback – but still up on the year.

The Halifax figures tend to be more volatile than other house price surveys.

Mark Harris, chief executive of mortgage broker SPF Private Clients, has sent us his thoughts about the Halifax numbers.

It has been a good start to the year for the housing market, considering the political and economic challenges the UK has to contend with, and there is definitely an element of people getting on with things.

People are bored with the to-ing and fro-ing on the political front, and can’t put their lives on hold indefinitely while the government sorts Brexit out. There is some prevailing nervousness towards the top end of the market where maybe the swings are greater and there may be more reason to hold off a purchase for the time being.

Brexit has created some pent-up demand and when we get a decision, whichever way it goes, we expect to see a spike in activity, not prices. There will be an uplift in transactions as confidence returns to the market and people know what they are dealing with.

That said, whatever happens, we expect to see national house prices continuing to hold up as they are doing at the moment, although this will mask regional differences.

Russell Galley, managing director of the mortgage lender Halifax, which is part of Lloyds Banking Group, said:

House prices have grown on an annual, quarterly and monthly basis for the first time since October 2018, taking the average house price to £236,800. The shortage of houses for sale will certainly be playing a role in supporting prices.

Annual house price growth at 2.8%, is within our expectations, but is fairly subdued compared to 2015 and 2016, when the average growth rate was 8.3%.

People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident.

The housebuilder Persimmon is the second-biggest faller on the FTSE 100 index, with the shares falling nearly 6% – perhaps on the back of a BBC report of a couple moving into a Persimmon house near Leeds last year with a staggering 700 faults.

Most European stock markets have opened lower, as expected.

• FTSE 100 in London down 0.39%
  
• Dax in Frankfurt down 0.37%
  
• CAC in Paris down 0.13%
  
• Ibex in Madrid up 0.29%
  
• FTSE MiB in Milan up 0.1%
  

There has been a flurry of corporate announcements this morning.

Greggs is still riding high on the success of its vegan sausage roll. The bakery and takeaway chain reported a 10% rise in underlying pre-tax profits for the year to 29 December, to nearly £90m. Like-for-like sales in shops managed by the company jumped 9.6% in the seven weeks to 16 February.

Countrywide, the estate agency group, has predicted flat underlying profits for 2019 and blamed uncertainty around Brexit for a cooling housing market.

The shares fell nearly 5% in early trading. The company is struggling after a botched restructuring forced it to issue shares to raise cash and announce four profit warnings last year. The weak housing market is expected to cut earnings in the first half of this year by £3m-£5m. Countrywide’s pre-tax loss widened to £218.2m in 2018 from £207.3m.

Admiral, the Cardiff-based motor and home insurer, has warned of potential economic disruption from a hard Brexit and, like other financial firms, has run stress tests to Brexit-proof its business and set up a business in Spain to ensure it can continue to sell insurance to people in the EU. The preparations have cost the firm £3m.

The Brexit warning overshadowed a better-than-expected pre-tax profit of £479.3m for 2018, up 18%, and pushed its shares down 3.6%.

Its bigger rival Aviva, which offers insurance products ranging from to pet and home, posted a 2% rise in operating profits to £3.1bn last year. Aviva’s new chief executive Maurice Tulloch, who was appointed at the start of this week, vowed to “re-energise Aviva”.