ECB holds rates and point to stronger-than-expected growth
|EUR/USD gained ground in the afternoon session, drawing support from an upbeat set of ECB communications and the soft US CPI report, which has reinforced the case for the Fed's ongoing easing cycle.
The ECB’s updated staff projections point to stronger-than-expected growth in the next couple of years. This was accompanied by suggestions of more persistent underlying price pressures, largely reflecting stickier services inflation. Although these changes were broadly anticipated, they should bolster the argument in favour of no further cuts in the near-term.
Monetary policy remains in a “good place”, and we don’t expect any interest rate changes in the coming months. The improved economic outlook raises the possibility that the next move in rates could be a hike, although this is a distant prospect and uncertainty is high. The ECB will likely keep its messaging relatively vague for the time being, with Lagarde doing exactly that by failing to provide forward guidance and instead highlighting optionality.
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.