ECB Meeting Accounts: Concerns were voiced over risks related to euro exchange rate


The European Central Bank's (ECB) Governing Council voiced concerns over risks related to developments in the euro exchange rate that might have a negative impact on the inflation outlook, the ECB's December Monetary Policy Meeting Accounts showed on Thursday.

Market reaction

The EUR/USD pair edged slightly lower with the initial reaction and was last seen losing 0.1% on the day at 1.2145.

Additional takeaways as summarized by Reuters

"It was observed that the December Eurosystem staff inflation projections were far below the governing council’s inflation aim."

"Pandemic Emergency Purchase Programme (PEPP) more efficient than a rate cut in the current pandemic conditions characterised by high uncertainty."

"Benefits of PEPP purchases outweighed the potential costs."

"The argument was made that a further lowering of yields from their already highly accommodative levels could be expected to have only marginal effects on growth and inflation."

"Members expressed broad agreement with the monetary policy package proposed by Mr Lane in his introduction."

"Keeping favourable financing conditions in such an environment could even accelerate the dynamics of the recovery."

"It was widely considered an appropriate and proportional response to the prevailing type of shock to increase the horizon of net purchases under the PEPP."

"Risks of an unanchoring of inflation expectations were salient."

"A more moderate increase in the PEPP envelope was advocated by a number of members."

"Some arguments were also made in favour of a larger envelope.."

"It was argued that the focus on preserving favourable financing conditions implied a move away from a constant monthly pace of purchases."

"No clear evidence, so far at least, that negative competitiveness effects were perceived by investors to significantly counteract the positive global demand effects implied by a weaker US dollar."

"A number of reservations were expressed with regard to the proposed increase in TLTRO borrowing allowance to 60%."

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.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD hits fresh one-month low amid souring market mood

EUR/USD has been extending its falls and dips below 1.21 as US retail sales badly disappointed and the worsening mood is supporting the safe-haven dollar. Markets digest Biden's stimulus plan. US Consumer Sentiment declined to 59.2 points. 

EUR/USD News

GBP/USD retreats toward 1.36 amid fresh dollar strength

GBP/US has pared its gains and falls toward 1.36 as the dollar gains ground. The UK economy shrank by 2.6% in November, better than estimated. The UK is ramping up its vaccination campaign and PM Johnson is pressured to ease the lockdown. 

GBP/USD News

Gold extends sideways grind near $1,850

The XAU/USD pair registered small daily gains on Thursday but struggled to extend its recovery amid a lack of significant fundamental drivers on Friday. As of writing, the pair was up 0.15% on a daily basis at $1,849.

Gold news

Forex Today: Markets “sell the fact” on Biden's stimulus, dollar rises, retail sales eyed

Markets are on the back foot after Biden hinted about tax hikes while introducing stimulus. The safe-haven dollar is edging higher despite Powell's pledge to keep monetary policy accommodative. 

Read more

DXY breaks above key downtrend, eyes move above 91.00

USD has been strongly supported on what has shaped up to be a very much risk off final trading day of the week. Most G10/USD pairs have seen significant weakness, aside from CHF/USD and JPY/USD, given that the two currencies are also considered “safe havens”.

US Dollar Index News

Forex MAJORS

Cryptocurrencies

Signatures