ECB
  • Prior decision
  • Main refinancing rate 2.50% vs 2.50% expected
  • Prior 2.00%
  • Deposit facility rate 2.00% vs 2.00% expected
  • Prior 1.50%
  • Marginal lending facility 2.75%
  • Prior 2.25%

At first glance, this is more of a hawkish tilt by the ECB as they reword their forward guidance to say that "interest rates will still have to rise significantly at a steady pace". They do that while reaffirming that future policy decisions will continue to be data-dependent. As such, you have to wonder whether there was a split and by how much to today's decision, between a 50 bps move and a 75 bps one.

Besides that, everything is as per what you'd expect from the ECB as they go hard on the language after having revised higher their inflation forecasts for next year. That is pretty much saying that they are determined to fight the inflation battle regardless of the slowdown in the economy.

EUR/USD has moved up from 1.0620 to 1.0645 in the immediate reaction and it's now over to Lagarde to try and hammer home the above points. Personally though, I'd still think that the window to tighten further is closing in on the ECB despite the hawkish rhetoric put out today.