ECB left main refinancing rate unchanged at 0.00% as widely expected. Marginal lending rate and deposit rate were held at 0.25% and -0.40% respectively. It also reiterated that interest rates will “remain at their present levels at least through the summer of 2019”. ECB also sticks with the plan to end the EUR 15B per month asset purchase after December.
In the post meeting press conference, ECB President Mario Draghi said “incoming information, while somewhat weaker than expected, remains overall consistent with an ongoing broad-based expansion of the euro area economy and gradually rising inflation pressures.” Also, “the underlying strength of the economy continues to support our confidence that the sustained convergence of inflation to our aim will proceed and will be maintained even after a gradual winding down of our net asset purchases.”
On inflation, Draghi noted while underlying inflation remains muted, they have been increasing from earlier lows. And underlying inflation is expected to increase further over the medium term. For now, Draghi iterated that significant amount of monetary policy stimulus is still needed to support buildup of price pressure. On growth, Draghi said risks can still be assessed as “broadly balanced”. Main prominent downside risks include trade protectionism, emerging markets and financial market volatility.
Overall Draghi’s press conference is composed as usual. EUR/USD recovers mildly but there is no change in it’s near term bearish outlook.
