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Draghi presents forward guidance on low rates – EUR

The ECB follows the BOE and also sends the currency lower as he states that rates will stay low for a long time: at current levels or even lower. In addition, the euro-area growth risks remain on the downside. Mario Draghi said he sees underlying price pressures in the medium term.

EUR/USD is falling sharply. It reached a low of 1.2882 before climbing back above 1.29 towards the end of the presser. This has been one of the most dovish apperances by Draghi for a long time.


  • Forward guidance: rates expected to remain low for a long time
  • Unprecedented, significant step forward.
  • Growth has downside risks
  • Decision was unanimous
  • 50bp is not lower bound
  • Open mind on a negative deposit rate
  • EUR/USD tumbles over 100 pips (so far)

Live Blog

  • 12:35 Recent confidence indicators are positive signs.
  • 12:36 Draghi says interest rates to stay low for an extended period of time.
  • 12:37 GMT EUR/USD already at 1.2918.
  • 12:38 Reduced demand for labor
  • 12:40 Heightened credit risk and ongoing adjustment
  • 12:41 Fragmentation needs to decline in order for the situation to improve.
  • 12:41 Steps for a banking union require a more speedy approach.
  • 12:42 Prices should remain balanced.
  • 12:42 ECB notes the EU Council decisions in the areas of youth unemployment and others.
  • 12:45 Draghi reiterates that all interest rates to remain low for an extended period of time.
  • 12:45 EUR/USD getting closer to 1.29.
  • 12:46 Discussed various ways of forward guidance.
  • 12:47 The decision was unanimous
  • 12:47 EUR/USD already under 1.29.
  • 12:49 ECB has guidance role on ABS initiative.
  • 12:50 Draghi asked about the “extended period of time” but doesn’t elaborate.
  • 12:51 The ECB injected a downward bias in bonds.
  • 12:52 The decision was unanimous regarding forward guidance.
  • 12:55 Draghi makes it clear that also the deposit rate could drop – EUR/USD already at 1.2890.
  • 12:55 Liqduidity will remain ample
  • 12:56 An extended period of time is not 6 or 12 months but “extended”
  • 12:57 Draghi avoids answering on a Greek haircut
  • 12:59 Objective to maintain price stability.
  • 13:03 Next communication moves unknown at the moment. EUR/USD stabilizes above 1.29 for now.
  • 13:05 We don’t react to others (regarding communication)
  • 13:05 Increased volatility justifies forward guidance.
  • 15:09 Portugal has made lots of progress.
  • 13:13 We have two types of backstops. Example: Spain.
  • 13:16 OMT was not designed to replace policy.
  • 13:18 Not all governments used the time in a good manner.
  • 13:20 Press conference ends.


The ECB left all interest rates unchanged: the main rate is at 0.50% and the deposit rate at 0%. This was widely expected. It’s important to note that the decision comes during low liquidity due to the US holiday.


Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.