ECB reiterates support for maintaining loose policy – MUFG

Lee Hardman, Currency Analyst at MUFG, notes that the euro has rebounded overnight reversing modest weakness following yesterday’s ECB policy meeting.

Key Quotes

“The outcome from yesterday’s meeting was broadly in line with our expectations having a relatively neutral impact on the market. President Draghi retained a very cautious stance despite the recent improvement in both economic growth and inflation in the euro-zone. It is not surprising as the ECB only just extended QE to the end of this year at their December meeting.”

“The ECB remains concerned by still weak core inflation which hasn’t picked up yet. It is prepared to look through higher headline inflation driven by the rebound in energy prices so long as there is little evidence of second round effects. President Draghi highlighted that nominal wage growth remains subdued which supports maintaining loose monetary policy for longer. It should help to keep the euro weak in the near-term.”