Don’t expect any rate hikes from me.

Today was the meeting day for the European Central Bank (ECB). They left interest rates unchanged as expected, so the interest was on Mario Draghi’s speech.

The ECB president has a reputation of talking the euro down, although that has failed to materialize in recent press conferences. That happened again today. Draghi sounded a bit dovish but the market ignored it and the euro jumped around 30-40 pips higher.

What were his words?

He said that growth is expected to remain broad-based as we now know. Inflation is going to be a headache for the ECB and Draghi accepted it, saying that they expect inflation to remain around these levels for some time.

He went further with bearish comments saying that the global risks have become more prominent and that the economic data is showing some moderation of the economic expansion. That translates to “the economic recovery has softened”.

The EU economies have been doing pretty well for quite some time. However, they can’t run really hot for too long. So, there will be periods when the economic expansion slows down. Anyway, the euro jumped initially, perhaps because the market was expecting Draghi to be more dovish. But, it has reversed back down now.