The European Central Bank (ECB) left interest rates unchanged at a meeting today, in-line with market expectations. ECB is largely seen as done hiking rates already. Statement released along with the decision showed that current level of rates is consistent with reaching the 2% inflation goal and that rates may need to be kept at elevated levels for an extended period of time.
ECB President Lagarde began a post-meeting press conference at 1:45 pm BST today. Below are key takeaways from the presser:
- The economy remains weak
- Subdued demand and tighter financing damp consumption
- The economy is likely to remain weak in the coming months
- Economy should strengthen over the coming years
- There are signs that the labour market is weakening
- Governments should roll back energy support measures
- Structural reforms can help reduce inflation pressures
- Inflation is expected to come down further in the near term
- Energy prices are less predictable due to conflicts
- Domestic price pressures remain strong
- Most measures of longer-term inflation expectations currently stand at around 2%
- Risks to growth skewed to the downside
- Credit dynamics have weakened further
- PEPP was not discussed
- We did not discuss the remuneration of reserves
- Now is not the time for forward guidance, its time for data-dependancy
- Debate on rate cuts is premature
- ECB has to be steady and has to hold
- Rise in yields is a spillover we take into account and helps bring inflation down
- More tightening is in pipeline for real economy
- Hold doesn't mean we won't ever hike again
- Growth has weakened and PMI data is not indicative of vigour
- Today's decision was unanimous
- I am not going to say we are at peak rates
EURUSD gained at the start of Lagarde's presser but has began to swing later on. The pair is up around 0.1% over the course of the press conference. European indices are also trading slightly higher compared to pre-conference levels.
Source: xStation5
