ECB rate decision, EUR price, news and analysis:
- There were no surprises from the European Central Bank Thursday as it kept all its monetary policy settings unchanged, as expected.
- Attention will now focus on the first press conference by new ECB President Christine Lagarde following a meeting of its Governing Council.
- EUR/USD[1] was stable after the rate decision.
ECB keeps rates on hold
The European Central Bank’s Governing Council confirmed predictions Thursday by leaving all its benchmark interest rates unchanged: the deposit rate at -0.5%, the marginal lending rate at 0.25% and the refinancing rate at 0.0%. There was also no change in its asset-purchase program, which restarted in November at €20 billion per month.
In a statement, the ECB said it expects interest rates to remain at their present or lower levels until it has seen the inflation outlook converge robustly to a level sufficiently close to but below 2% within its projection horizon and such convergence has been reflected consistently in underlying inflation dynamics.
As for its asset purchases, the ECB said it expects them to run for as long as necessary to reinforce the accommodative impact of its interest rates and to end them shortly before it starts raising interest rates.
In response, EUR[2]/USD[3] was barely changed.
EURUSD Price Chart, Five-Minute Timeframe (December 12, 2019)
Chart by IG[4] (You can click on it for a larger image)
In the money markets prior to the latest rate decision, the implied likelihood of the deposit rate being left at -0.5% was 83%, with a 17% chance of a small cut to -0.6%. The markets also implied that the rate would still be close to its current level at the end of 2020 and that remained the case after the
