ECB: No sufficient reasons to move now – Rabobank

Research Team at Rabobank, suggests that on the expected lines, the ECB kept all its policy settings unchanged today and it seems to have become a customary thing now, this was communicated with the release of a short statement.

Key Quotes

“The main rationale for this unchanged policy stance was that whilst the risks to the economic outlook remained tilted to the downside and its GDP projections by the ECB staff were revised downward, these adjustments were insufficient (in Draghi’s words: “for the time being the changes are not substantial enough to warrant a decision to act.”) The staff projections for inflation were largely unchanged and is “broadly following the baseline scenario”, although Draghi conceded that “it will take a little longer” for inflation to reach its target.

The ECB still has full confidence in the beneficial effects of its policy measures; Mr. Draghi highlighted that although developments in bank credit continue to reflect their lagged relationship with business cycle “[...] monetary policy changes are increasingly filtering through to firms and households.”

President Draghi was again relatively tight-lipped, albeit not as much as in July. Altogether, the underlying tone struck by Draghi in this press conference was dovish. Especially the fact that Mr. Draghi cited comments by Peter Praet: “[…] underlying inflation pressures continue to lack a convincing upward trend and its future path is conditional upon our very accommodative policy stance.”

Indeed, we believe that the real reason why the Governing Council did not want to act now was because it wants to think more thoroughly about a medium term action and communication plan so as to prevent a repeat of last year.”

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: Bears hold the grip, critical challenge at 1.2000

The greenback firmed up at the end of the week, closing it with substantial gains against most major rivals. Renewed coronavirus concerns and poor macroeconomic data spurred risk-off. EUR/USD is firmly bearish.


GBP/USD: Further restrictions in the UK may hit the pound

The GBP/USD pair trimmed most of its weekly gains on Friday and settled in the 1.3580 price zone, amid risk-off fueling dollar’s demand. UK GDP contracted by less than anticipated in November, Industrial Production plunged.


Gold: Further decline toward $1,800 remains on the cards

Gold failed to stage a convincing rebound this week. After losing more than 2% in the previous week, the XAU/USD pair extended its slide on Monday and touched its lowest level since early December at $1,817. 

Gold news

Darkest fefore dawn

The upcoming economic news is likely to be dreadful, and if it is not dreadful, it will be mostly ignored. This includes the release of the preliminary January PMI figures at the end of the week. Japan is extending its national emergency to another five prefectures, which collectively account for over half of the nation's GDP.

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