Key points of discussion:
- EUR / USD then jumps back when the ECB provides policy guidance
- Inflation remains below target
- Stock purchases will remain in place until interest rates need to be raised
EUR/USD has sought to gain momentum if the European Central Bank leaves monetary policy unchanged, but profits have returned quickly. The couple has been on a declining trend since early June, when US dollar began to pick up, falling to a four-month low, amid concerns about economic recovery and inflationary pressures in the euro area. Although the unchanged policy was largely expected, it is also seen as a slightly positive rise for the euro, as there was talk of the possibility of further easing.
One of the main remarks in the press release is that interest rates have been close to lower for some time and the medium-term inflation outlook remains well below its target, although they expect inflation to be moderately above the target period during the transition period.
The central bank has maintained the current pace of its asset purchases in order to strengthen the interest rate stimulus effect of its policy and is expected to hold on until it is ready to raise interest rates. The ECB is considered to be one of Europe’s most counterfeit banks, so today’s remarks are no surprise to markets that were largely waiting for the message to remain unchanged.
See how Christine Lagarde, President of the ECB, and Luis De Guindos, Vice-President, explained the Governing Council’s decision directly in the press at 13.30 BST.
EUR / USD 1 minute diagram
– Written by market analyst Daniela Sabin Hathorn
Follow Daniela on Twitter @HathornSabin