Trevor Charsley of currency trading firm AFEX says Draghi’s comments show we’ve entered a ‘phoney war’ following the EU referendum.

“In commenting that there was no Brexit induced disruption apparent in the banking sector, Draghi was merely confirming that, after a knee jerk reaction in the markets immediately following the EU referendum, we have effectively entered a period of limbo or a ‘phoney war’ while we await more economic data, while political decisions are made and holidays taken.

This situation could last for several months, he adds:

As we receive the announcement of a plan from the UK government, a few months of post-Brexit economic data and a potential triggering of Article 50, the fog will begin to clear and we’ll see then how the central banks respond

Mario Draghi’s introductory statement is now online here.

And here’s a word cloud of it:

Ian Kernohan, Economist at Royal London Asset Management, is quick out of the traps with some reaction to the ECB’s meeting:

While we think Brexit uncertainty is mainly an issue for the UK economy, there is also bound to be some knock-on impact on the Eurozone. With post-Brexit evidence still patchy, we think the ECB will wait until the September meeting before extending its QE timetable.

Inflation remains far below the ECB’s target of 2% and while headline inflation will rise later in the year, thanks to the fading impact of a lower oil price, underlying inflationary pressures still remain very low. Delaying until September will allow an assessment of any Brexit impact to be outlined in the new ECB staff forecasts.

Final question....

Q: European bank shares are at record lows, so is there a fundamental lack of confidence in the eurozone banking sector?

Draghi says that the problem is about the future profitability of banks, not their solvency. That’s partly due to concerns about non-performing loans (which is why Draghi is pushing for a new market for them to be traded).

But he is confident that this situation, and the perception in the rest of the world’s eyes, can be improved.

And that’s it

Now we’re DEEP into conspiracy territory...

Q: Your son is a bond dealer in London, Mr Draghi, so isn’t that a conflict of interest?

Draghi says that he explained five year ago that his son was a trader, not a bond dealer, so there is no conflict of interest. The European Parliament agreed at the time.

OK, we’re wandering into conspiracy territory now, with a journalist asking Draghi if the ECB is committed to using notes and coins as sole legal tender.

Yes. Of course. There is, says Draghi, looking a little puzzled.

Q: So why did you bury the €500 note?

We didn’t bury it, Draghi says. We decided to stop printing it from 2018 to stop it being used by criminals.

Draghi is asked about the ECB’s presence in the “troika” which oversees eurozone bailouts.

He says it’s not his decision; it’s due to legislation passed by the European Parliament which wanted its expertise involved. The eurozone now has more expertise, but MEPs would have to pass new legislation if they want to get the ECB out of the Troika.

Francesco Papadia, a former senior ECB policymaker, reckons Draghi wants out:

Q: What impact will the political crisis in Turkey have on the eurozone recovery?

It’s very difficult to understand how these big geo-political issues will affect the economy, Draghi replies. It’s not obvious how they would be channeled into the euro economy.

At least with Brexit you have the trade channel - although that may not be the best thing to look at.

With Turkey, it’s hard to see an immediate near-term hit to the euro recovery, he concludes, although it is likely to hurt confidence.

Q: What message would you like to hear from G20 finance ministers and central bankers when they meet in Shanghai later this week?

We need to hear a message of stability, Draghi replies. Banks and financial institutions are much stronger than before the last financial crisis.

The euro has jumped by half a cent as investors react to Mario Draghi’s straight bat to all tantalising questions about future stimulus plans.

Hmmmm this might be interesting. Draghi has dangled the idea that governments should step in, if needed, to protect a bank that needs to sell non-performing loans.

This would avoid the risk of “firesales”, in which a bank is forced to sell assets at a big loss.

That’s pertinent in Draghi’s homeland of Italy right now, as the government tries to find a way to strengthen its banks without breaching EU rules.

Q: How much damage will Brexit do to eurozone growth? Does Draghi believe that estimates of 0.2%-0.5% knocked off the growth rate are accurate?

We should take such estimates with a grain of caution, the ECB president replies. It is too early to see the financial impact, and we needs to wait and see the eventual outcome of the vote.

Draghi then repeats that eurozone markets have been “fairly resilient” since the vote on June 23.

We haven’t seen any disruption in the banking sector or the financial sector, he says, which is testament to the contingency measures drawn up by policymakers and the large amounts of liquidity available.

Europe’s banks are in better shape than in 2009, Draghi declares, partly thanks to the ECB’s efforts to strengthen the sector and boost solvency.

He then embarks on a long explanation about the need to tackle non-performing loans (NPLs) to improve bank profitability.

Important stuff, but not the fireworks we might have hoped for:

Twenty minutes into this press conference, and there’s no sign that Draghi is going to pull a rabbit out of his hat.

It appears that the ECB wants everyone to go away and come back in September.

Q: Could the ECB have already done enough to stimulate the economy and support inflation expectations?

Draghi says there is a difference between public surveys of inflation expectations, and the market-based expectations.

Surveys of professional forecasts show that inflation will increase....close to the ECB’s targets in the medium term, but market expectations suggest investors are rather more pessimistic.

And he repeats that the governing council believes it is too early to agree new measures at today’s meeting.

However, he insists that the ECB has the readyness, willingness, and ability to act, if needed.

Onto questions:

Q: Did the ECB consider changing the terms of its asset-purchase scheme, to avoid it running out of government bonds to buy?

Draghi repeats that the ECB believes it is too early to assess the need for fresh measures, so it will consider the situation at its next meeting in September.

There wasn’t any real discussion about the details of such changes, he adds.

As usual, Draghi is urging eurozone politicians to step up the pace of structural reforms, to improve their business environment.

He suggests that governments could boost infrastructure projects, to increase employment and investment.

Fiscal policies should also support the recovery, he adds -- a hint to governments to spend more (without breaching eurozone deficit rules).

All countries should strive for a more “growth-friendly” mix of fiscal policies, Draghi concludes (a message we have heard several times...)

Mario Draghi has arrived in the press conference room in Frankfurt, and is posing for a few photos with colleagues.

And we’re off......

Naeem Aslam of City firm Think Markets says the ECB was right to leave interest rates unchanged today while it gauges the impact of the Brexit vote:

There was no smoke from the ECB’s gun as the bank has decided to hold its fire as expected. Perhaps, it was the best move because the bank certainly wants to assess the consequences of Brexit which has triggered the need for more QE and dragged the bond yields in negative territory.

Aslam also warns that the markets could slide if central banks don’t deliver the stimulus which investors expect:

The market is addicted to this medicine and most of the boom which we have experienced in the equity market is based on the basis of this cheap funding.

If these liquidity tanks start to run dry, we may start to see the heavy sell off which many have been waiting for....

More reaction:

Here’s some instant reaction to the ECB’s announcement, and predictions about what we might hear from Mario Draghi in 30 minutes:

There are just 30 minutes to go, until the ECB announces its monetary policy decision.

Reminder, economists are currently expecting no change to the current rates, which are:

• Headline interest rate: 0.0%
  
• The deposit rate (paid by commercial banks who leave money at the ECB): - 0.4%
  
• The marginal lending facility (charged to banks who borrow from the ECB): +0.25%.
  

Nordea Markets analyst Aurelija Augulyte points out that a surprise can’t be ruled out.....

Investors have paid to lend money to Spain for the next three years, for the first time ever:

It’s a sign of the nervousness in the markets, with investors keen to put money into safe-haven government debt.

It’s also a consequences of Mario Draghi’s bond-buying programme, which has helped drive down bond yields to record lows. Whoever bought these bonds could theoretically sell them onto the ECB at a profit (the lower-threshold for bond purchases is -0.4% yield).

There’s more on the ECB’s agenda than Britain’s EU referendum, says FXTM Research Analyst Lukman Otunuga:

Although Brexit remains the biggest risk threatening Eurozone’s recovery, there are more challenges to be addressed when the central bank meets later today, such as the troubled Italian banks and the plunging yields on governments’ debt which makes it difficult for the ECB to pursue its €80 billion monthly debt purchases without amending the terms of their program.

He also expects no fresh action today, especially as the ECB has already boosted its stimulus programme once this year. That will leave the scene clear for Mario Draghi’s press conference:

Mr. Draghi’s only tool is likely to be his dovish words on opening the door for further easing if economic conditions deteriorate.

European stock markets have all lost ground this morning, as investors wait to hear from ECB president Mario Draghi.

The main indices are down around 0.5%:

City investors expect reassuring words from Draghi at his press conference, at 1.30pm BST.

Chris Beauchamp of IG explains:

The relatively shallow pullback seen in eurozone markets this morning would seem to indicate a calm atmosphere – given the myriad problems facing the eurozone, and indeed the UK and EU, it seems highly likely that Mario Draghi will seek to soothe frayed nerves with a generally dovish statement.

More from Jack Lew in Athens:

From Brexit to Grexit...

Over in Athens, US Treasury secretary Jack Lew has urged the Greek government to stick with its bailout plan.

Lew says Greece needs to deliver the privatisation plans and economic reforms agreed with its creditors, so it can unlock the next loan tranche this autumn.

Sounding like a man who doesn’t fancy another Greek bailout crisis, Lew declared:

“Putting Greece’s debt on a sustainable path is critical to Greece’s long-term economic health and I encourage all parties to be flexible to successfully conclude this fall’s negotiations.”

Peter Rosenstreich, head of market strategy, Swissquote Bank, also predicts that the European Central Bank will leave its powder dry today.

He expects monetary policy will be unchanged, while president Mario Draghi will probably hint at stimulus measures later this year:

With the true extent of the Brexit effect still unclear, and the Euro on the weaker side (due to renewed expectations for a September Fed rate hike), the central bank is under no real pressure to act. Draghi will therefore most likely adopt a wait-and-see approach.

We expect the meeting and press conference to contain warnings that economic downside risks have grown and that the bank remains ready to ease monetary policy further, if necessary.

The Economist Intelligence Unit concurs:

We also have new UK government borrowing figures.....which show that Britain borrowed £7.8bn to balance the books in June.

That’s £2.2bn less than in June 2015, and the smallest figures for any June since 2007 (just before the credit crunch struck).

The Daily Mail was a big supporter of the Brexit campaign.

But now that the victory is in the bag, its parent company says it’s suffering as nervous advertisers wonder what the future holds:

Budget airline easyJet has spooked the travel sector with a gloomy financial update and a warning that the Brexit vote will hurt demand.

Shares in easyJet have slid by 4.4% this morning, to the bottom of the FTSE 100, after it posted a 2.6% drop in sales in the last three months. It blamed poor weather and air traffic control strikes.

CEO Carolyn McCall warned that this summer could be challenging, as the recent fall in sterling makes it more expensive for Brits to holiday abroad. She also cited last week’s failed Turkish coup and the latest French terror attacks:

Currency volatility as a result of the U.K.’s referendum decision to leave the EU as well as the recent events in Turkey and Nice continue to impact consumer confidence.”

Anthony Cheung of Amplify Trading flags up the key issues on the ECB’s agenda today:

The third point is important – basically, the ECB is running short of some government bonds to buy, having mopped up so many already.

German bunds is in particularly short supply, due to the current limits which prevent the ECB buying more than 33% of a country’s debt.

Naeem Aslam of ThinkMarkets UK explains why a change may be needed:

The Bundesbank needs to purchase 253 billion euros of debt by the end of this month, but due to the present issuer limit of 33%, the world of eligible assets stand at 216 billion euros.

It will be a big surprise if the ECB launches new stimulus measures today, rather than waiting until its next meeting in September:

The boss of William Hill has been abruptly dismounted from his position at the bookmaker.

CEO James Henderson’s unexpected departurture was announced to the City this morning.

He has paid the price for its disappointing online performance, which has hit profits recently. It’s a glum end to his 31-year career at the bookmaker.

Brexit is a double whammy for the European Central Bank.

As well as generating economic uncertainty, it could create more political instability in the eurozone.

Florian Hense, economist at German bank Berenberg, explains why it’s a difficult time for the ECB:

Political risks loom unusually large, and the British vote on exiting the EU exemplifies the danger which the surge in anti-establishment sentiment presents.

Investment could contract, while private consumption growth will slow. Recent attacks in Nice and the attempted coup d’etat in Turkey could further weigh on confidence.

Hense expects that the ECB will leave monetary policy unchanged today.

The press pack are already gathering in Frankfurt, where Bloomberg’s inflatable euro looks like it needs a holiday: