The European Central Bank’s (ECB) Governing Council noted that near-term price pressures were expected to remain subdued, the ECB’s September Monetary Policy Meeting Accounts showed on Thursday.
Key takeaways as summarized by Reuters
“Recovery was asymmetric, being further advanced in the manufacturing sector than in the services sector.”
“There was no room for complacency. Inflation had been persistently below levels consistent with the governing council’s inflation aim and inflation expectations remained close to their historical lows.”
“Members widely agreed with the assessment presented by Mr Lane that ample stimulus remained necessary.”
“Uncertainty about the evolution of the ongoing COVID-19 pandemic and the potential materialisation of adverse real-financial feedback loops called for vigilance.”
“In the prevailing environment of high uncertainty, keeping a steady hand with respect to monetary policy was seen as most appropriate.”
“The case was made for keeping a free hand.”
“There had been a marked appreciation of the euro exchange rate since July.”
“It also reflected developments in monetary conditions in the euro area relative to the rest of the world.”
“Inflation was expected to remain persistently low over the medium term, notwithstanding a gradual pick-up over the projection horizon.”
“Pandemic, Brexit, US election, fiscal plans need to be monitored.”
“On the basis of the current information, the Pandemic Emergency Purchase Programme (PEPP) envelope would likely have to be used in full.”
“The point was made that the pace of monthly purchases could be reduced as tensions in financial markets subsided.”
“Broad agreement among members that there was no room for complacency.”
“Recent appreciation of the euro exchange rate had had a material impact on the inflation outlook in the September ECB staff projections.”
“It was noted that further cuts in policy rates and changes to the conditions of the TLTROs were also part of the toolkit.”
“Market positioning remained tilted towards further euro appreciation, with net speculative us dollar positions against advanced economy currencies, including the euro, remaining sizeable.”
Market reaction
The EUR/USD pair edged slightly lower after this publication and was last seen losing 0.05% on the day at 1.1755.
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