Lagarde Doesn’t Mind the Stronger Euro, Unlike Draghi

Posted Friday, September 11, 2020 by
Skerdian Meta • 2 min read

The European Central Bank ECB has taken a number of steps to help the European economy during the coronavirus times, on top of the contribution by the EU, which is throwing more than EUR 1.3 billion into the pot. The EUR/USD turned bullish during this time, climbing above 1.20 by September 1, but, unlike the previous ECB president Mario Draghi, the current president, Christine Lagarde, is not worried about this. They have kept the interest rates unchanged as expected, while they remain positive regarding the demand from the European consumers. The EUR/USD jumped 50 pips higher after those comments.

ECB Rates and Statement

  • Deposit facility rate -0.50%
  • Main refinancing rate 0.00%
  • Marginal lending facility 0.25%
  • To continue purchases under PEPP program, with a total of EUR 1.35 trillion
  • Purchases will continue to be conducted in a flexible manner over time
  • Reaffirms that purchases will be conducted under PEPP until at least the end of June 2021
  • Will continue to provide ample liquidity through refinancing operations
  • Stands ready to adjust all instruments, as appropriate, to ensure that inflation moves towards its goal in a sustained manner, in line with its commitment to symmetry

This was pretty much a non-event, with the statement pretty much mirroring that of July. The euro was rightfully little changed after the announcement, as all eyes will be on Lagarde’s press conference later at 12:30 GMT, for more clues on the central bank’s latest economic forecasts, inflation outlook and potential thoughts about the euro currency.

Comments by Christine Lagarde

  • Says the ECB will monitor the FX rate
  • Strength of recovery remains shrouded by uncertainty
  • Rebound broadly in line with previous expectations
  • Domestic demand has recorded significant recovery
  • Uncertainty is weighing on consumer spending and business investment
  • Inflation is being dampened by energy prices
  • Ample monetary stimulus remains a necessity
  • Incoming data suggests notable recovery in consumption
  • The ECB will carefully assess the euro’s effect on inflation
  • New infections are providing a headwind for the short-term outlook

The euro jumped to 1.1891 from 1.1850, after the headline by Lagarde.


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