European Central Bank monetary policy decision - 25 July 2019
- Prior decision
- Main refinancing rate 0.00%
- Marginal lending facility 0.25%
- Deposit facility -0.40%
- Sees rates at present or lower levels at least through 1H 2020
- Central bank stands ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards aim in a sustained manner
- Says will examine options for tiering, potential QE
- Orders review of options including tiered system for rates
- Says needs highly accommodative policy for a prolonged time
- Determined to act if inflation outlook falls short of its aim
Despite the central bank not acting here, the adjustment to the forward guidance and mentioning of further easing measures is just about as dovish as they can get. The part on examining options for rate tiering and QE highlights that and the former will at least be a relief for banks as cuts are set to come in September.
Of note, there's a subtle tweak to the forward guidance with the ECB allowing for rate cuts now shifting from "rates at present levels at least through 1H 2020" to "rates at present or lower levels at least through 1H 2020".
EUR/USD nudged higher initially on the rate decision to 1.1161 but after digesting the details, the pair has fallen to a low of 1.1119 before lingering around there now. Expect a more dovish Draghi to potentially send the pair below the year's low of 1.1107 later on.
