The ECB Starting to Complain About the Strong Euro

Posted Thursday, October 8, 2020 by
Skerdian Meta • 1 min read

The stance of the European Central Bank has changed since Christine Lagarde took over from Mario Draghi as the president. Draghi loved to talk the Euro down, whenever he felt like it. According to Draghi, that was one of his main tools to help the Eurozone economy. But, we haven’t seen Lagarde do that.

She hasn’t complained about the stronger Euro. But the rest of the ECB does sound worried about the EUR/USD trading near 1.20. If such comments keep coming, the EUR/USD will turn bearish again, but it is holding up for now.

ECB releases its account of the September monetary policy meeting

  • Based on current information, PEPP envelope will most likely be used in full
  • Further rate cuts and changes to TLTRO conditions are also part of the toolkit
  • Broad agreement among members, that there is no room for complacency
  • There has been a marked appreciation of the euro exchange rate since July
  • Market positioning remained tilted towards further appreciation of the euro
  • Inflation is expected to remain persistently low over the medium-term
  • Coronavirus pandemic, Brexit, US election, fiscal plans need to be monitored
The euro is mentioned quite a lot, but mostly, they just pointing out that there is some impact from the latest appreciation on the inflation outlook in general. The minutes fall short of detailing any added concerns beyond what has been said recently.
Besides that, there doesn’t seem to be too much of a divide – or at least it is not explicitly mentioned – as there is only a mention that the governing council feels that more accommodative policy should stay the course for the time being.


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