The big news earlier today was ECB President Christine Lagarde announcing that she will depart in February.
Bank in April on Bloomberg TV she said: “When there is big clouds on the horizon, the captain does not leave the ship— and this captain is not going to leave the ship, because I see clouds.”
So I guess she doesn’t see clouds any longer.
In any case, here are the headlines:
- Main refi rate 2.65% vs 2.65% expected
- Deposit rate 2.50% vs 2.50% expected
- Marginal lending facility at 2.90% vs 2.90% expected
- Says energy prices continuing to rise, posing upside risks to inflation outlook and downside risks to growth
- Underlying inflation has remainded broadly stable so far and wages do not show a material response at this stage
- Well positioned to navigate uncertainty
- ECB is not pre-committing to a particular path
- ECB says stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilizes at its 2% targetr
The market was pricing in a 13% chance of a surprise hike this month but that rises to 65% in December. Ahead of the decision, the euro was down 21 pips to 1.1131 as it hovers near the lows of the year. The knee-jerk reaction to the decision has been minimal.
EURUSD daily:
This article was written by Adam Button at investinglive.com.