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The European Central Bank (ECB) kept monetary policy unchanged today. According to BBVA, the central bank offered no hints of policy changes in the near term and they expect it to remain on hold.  

Key Quotes:  

“The focus of today’s monetary policy meeting – Draghi’s last one as ECB President- was marked by the divisions that broke up immediate before and after September’s meeting, where a bold package of further accommodative measures was approved. No decisions were expected and indeed the ECB maintained its monetary policy stance, leaving key interest rates and forward guidance unchanged.”

“During the press conference Mr Draghi maintained his dovish tone, mentioning that the central bank continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner.”

“In a relatively relaxed press conference, Mr. Draghi provided a dovish tone, in line with his entire presidency – a central banker who began his term by lowering interest rates and who closed his mandate with a bold stimulus package-. He did not give any hints about action to be taken in the short term, trying not to tie the hands of his successor, Mrs Lagarde.”

“We expect the ECB to remain on hold, monitoring the impact of the measures announced in September, in a scenario which has not changed much since the last meeting with an improvement of the Brexit outlook but with still weak data and with other global risks looming. If we add to that the split of the GC for the latest package, our baseline scenario for euro rates (another deposit rate cut in the short/medium term to -0.6%) seems less likely.”