European Central Bank monetary policy decision - 6 June 2019
- Prior decision
- Main refinancing rate 0.00%
- Marginal lending facility -0.25%
- Deposit facility -0.40%
- Sees rates at present levels at least through 1H 2020
- To reinvest QE debt for extended period of time after first rate hike
- Rates will remain likely where they are until inflation reaches its goal
- Prices new TLTRO at MRO+10bps
- Says that TLTRO rate can be as low as deposit facility + 10 bps
There's a bit of everything in the statement here. The change in forward guidance is noticeably dovish but the the rate applied for the TLTRO is something that will benefit banks/financial institutions in the region, that's a hawkish decision.
The consensus for the TLTRO rate was somewhere around MRO-20bps so that is the biggest surprise in the statement here. As for how the forward guidance affects market pricing, it really doesn't change all too much as money markets have already priced in a 10bps rate cut in the deposit facility by March 2020.
The euro has risen after the statement after a bit of indecision, with EUR/USD hitting a high of 1.1250 levels now from 1.1220 levels earlier.
