Edit….Gold popped 10 on the news but back don now

The European Central Bank has hinted that it will cut rates in September in a bid to aid the region’s exporters, setting the stage to become the latest central bank to lower borrowing costs to calm fears of a global economic slowdown.

The bank opted to keep rates on hold at its meeting in Frankfurt today, with the main refinancing rate remaining at zero and the deposit rate at minus 0.4 per cent.

However, it changed its forward guidance to say that it expects rates to remain “at their present or lower levels” at least through the first half of 2020. The addition of the possibility of rate cuts will raise expectations that the ECB will cut the deposit rate in September.

The decision comes days ahead of a crucial vote by the Federal Reserve, when the US central bank is expected to announce that it plans to cut interest rates by 25 basis points.

The world’s two most important central banks are both responding to fears that the climate of political uncertainty will derail growth. A number of other leading central banks have also cut rates in response to fears of a slowdown in the global economy.

ECB president Mario Draghi is set to meet the press in Frankfurt at 2.30pm local time, when analysts will be on the lookout for clues on whether the ECB could revive its €2.6tn quantitative easing programme in the coming months.

The bank has not expanded the programme since December, but Mr Draghi has indicated in recent weeks that it could do so, should the economic data continue to suggest growth will remain sluggish.

The eurozone’s export-dependent economy is under pressure from global geopolitical uncertainty, which is weighing on confidence and investment.

The Ifo poll of business sentiment in Germany, the region’s largest economy and export powerhouse, fell sharply in July to its lowest reading in more than nine years.

“The expectations index is now weaker than during the sovereign crisis,” said Greg Fusezi, an economist at J.P. Morgan. “The disappointment also looks broad-based by sector, with only construction bucking the trend.”

Mr Fusezi added: “The likelihood that QE will be restarted soon