ECB Minutes Show Policymakers Considering Fresh Stimulus, EURUSD Holds Steady


ECB Talking Points

  • ECB Minutes Show policymakers had a downbeat view on Eurozone economy in light of soft data.
  • ECB requested swift analysis on fresh stimulus, however, warned against hasty action.
  • Euro little changed following release

ECB Considering Fresh Stimulus Amid Concerns over Slowdown

The ECB meeting minutes showed that policymakers took a more cautious view on the Eurozone economy given the persistently soft economic data. As such, the central bank has asked for swift analysis on the benefits of TLTROs, however, does warn against hasty action. Alongside this, the ECB showed concerns over continued weakness which could weigh on inflation expectations.

Interest Rate Guidance

The ECB had also acknowledged that while data had been weaker than expected, financial conditions had been eased by markets shifting expectations for ECB rate lift-off. As it stands, money markets are now pricing in a 43% likelihood of a 10bps hike by the year-end.

ECB Minutes Show Policymakers Considering Fresh Stimulus, EURUSD Holds Steady

Source: Refinitiv. ECB Rate Expectations.

Minimal price action observed with the Euro following the release of the ECB minutes, given that the release has provided little in the way of new information amid the plethora of ECB commentary since the rate decision.

ECB Minutes Show Policymakers Considering Fresh Stimulus, EURUSD Holds Steady

EURUSD PRICE CHART: 1-Minutes Time Frame (Intra-day)

ECB Minutes Show Policymakers Considering Fresh Stimulus, EURUSD Holds Steady

For a more in-depth analysis on EUR, check out the Q1 Forecast for EUR

— Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX





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