ECB Policy Meeting Unlikely to Materially Impact the Euro - MUFG
Lee Hardman, Currency Analyst at MUFG, notes that the euro has weakened
modestly ahead of today’s ECB policy meeting and they are not expecting
the meeting to have a material impact on the euro.
“After the ECB announced a comprehensive package of new easing measures at their last meeting, it is likely that today’s meeting will be just a holding operation as the ECB continues to assess the initial impact from the new easing announcements. It is likely that President Draghi will continue to talk up the potential effectiveness of their new easing measures to help support the euro-zone economy and return inflation back towards their target.
President Draghi may even take a more defensive tone following recent criticism of the ECB’s easing measures by German politicians. He is likely to reiterate that the ECB would implement further easing measures if required although emphasize that the ECB does not judge it necessary at present. The ECB signalled at their last meeting that they are less in favour now of lowering rates further into negative territory although did not completely rule it out. It prompted euro-zone short rates and the euro to rise following their last meeting. Short rates have since partially reversed the move higher. We expect President Draghi to reiterate the same negative rate message but it should have less impact today.”