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Lagarde: There is no need to overreact to euro gains

  
  Analysis
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Comments from Lagarde in the ECB opening statement:

Lagarde Sept 10
  • Says ECB will monitor FX rate
  • Strength of recovery remains surrounded by uncertainty
  • Rebound broadly in line with previous expectations
  • Domestic demand recorded significant recovery
  • Uncertainty weighing on consumer spending and business investment
  • Inflation dampened by energy prices
  • Ample monetary stimulus remains necessary
  • Incoming data suggest notable recovery in consumption
  • ECB will carefully assess the euro’s effect on inflation
  • New infections are a headwind to the short term outlook
  • Repeats that an ample degree of easing needed
  • Fiscal measures should be targeted and temporary
The euro jumped to 1.1891 from 1.1850 on the headline from Lagarde.

ECB leaves rates unchanged, as expected

  
  Analysis
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ECB continues to reiterate stands ready to adjust all of its instruments

ECB continues to reiterate stands ready to adjust all of its instruments
  • Full statement
  • Prior statement
  • Interest rates to remain at present or lower until it has seen inflation outlook robustly converge to a level sufficiently close to but below 2% within its protection horizons (repeat)
  • No change to rate tiering multiplier
  • Will continue purchases under PEPP with a total envelope of 1,350B euros
  • Will continue to fully invest maturing securities at least through end-2022
  • PEPP will run at least through end of June 2021
  • The ECB cites ‘very high takeup’ of TLTRO-III
  • In its June forecast the ECB saw GDP down 8.7% in 2020 and up 5.2% in 2021
There are no changes here whatsoever. The euro chopped around 1.1400 on the release but has ticked up to 1.1410 since.
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