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FXstreet.com (Bali) - The ECB Governing left its policy rates unchanged as expected at its first meeting of the year, notes Anatoli Annenkov, Economist at Societe Generale.

Key Quotes

"Overall,President Draghi sounded more upbeat on the improving conditions for economic activity in the euro area, while at the same time strengthening the ECB’s commitment to act in case of a worsening inflation outlook and an unwarranted increase in money market rates."

"The low December inflation number was explained by a technical one-off effect, with inflation in line with the previous assessment of subdued inflation developments in the medium-term."

"He also stressed the ECB’s Treaty obligation to assure price stability “on both sides” and that they will do so by using all instruments “allowed by the Treaty”."

"We expect that more liquidity provision and/or a rate cut will be needed later this spring, and that the ECB would stand ready with asset purchases in a scenario of area-wide deflation."

"Finally, the ECB will provide more details on its AQR and stress tests at the end of January while the decision on publishing a summary of the minutes may take longer due to concerns to protect the independence of governors."
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