ECB: Risks to economic growth are tilted to the downside – BBH
|EUR/USD retraced some of yesterday’s post-ECB meeting slump. As was widely anticipated, the ECB cut the key deposit facility rate 25 bp to 3.25%. The ECB also stuck to its data-dependent guidance reiterating it is not pre-committing to a particular rate path, BBH FX analysts note.
Process of disinflation seems more robust
“The bar for additional ECB easing is low and an ongoing drag for EUR. The ECB noted ‘the disinflationary process is well on track’ while ECB President Christine Lagarde reiterated that risks to economic growth are tilted to the downside.”
“Moreover, Lagarde confirmed the decision to cut 25 bp yesterday was unanimous and highlighted there was more downside than upside risks to inflation. Market is now pricing in almost 175 bp of ECB rate cuts over the next twelve months that would see the policy rate bottom near 1.50% vs. 2.00% earlier this week.”
“ECB officials followed through on the bank’s dovish policy outlook this morning. Governing Council member Villeroy said the direction is clear in my eyes — we should continue to reduce the restrictive character of our monetary policy in an appropriate manner. Meanwhile, Governing Council member Vasle noted everything points to the process of disinflation being more robust.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.