Highlights from ECB Lagarde press conference:
- Downside risk to the economy increase substantially
- initial signs of inflation expectations above target warrant monitoring
- risk to inflation outlook tilted to the upside in near term; upside risks intensified
- inflation is more widespread
- inflation is mainly driven by energy
- core inflation rise is uncertain
- reopening of sectors after pandemic, strong labor market to support incomes
The EURUSD has moved to the downside on the initial comments from ECBs Lagarde and trades above and below the 200 hour MA at 1.0871.
More:
- APP is likely to end in Q3. Could be early or late in Q3.
- Open minded about specific and within Q3
- Some time after is anything between a week in several months
- unwarranted fragmentation should be avoided
- the longer inflation will remains high the more likely it is for negotiated wages to rise
- we cannot be riveted to projections, have to look at other data
- last thing we want is inflation expectations at risk of the anchoring
- We are normalizing policy and have a sequence for what we will be doing going forward
- We are on a journey with regard to monetary policy.
- We will assess timing of asset purchases in June
- Sometime after the APP ends, we can make decisions on rates
- Have to keep in mind that below is the very high inflation rates, but we are also seeing medium-term outlook for inflation gradually moving back toward our target and possibly below
- Economy in the euro area is much different than the economy in the US
- Euro areas were exposed as a result of the war in Ukraine
- Comparing ECB and US respective monetary policies is comparing apples and oranges
- Totally premature to say one flexibility will be deployed
- Governing council meeting didn't focus on FX rates
The press conference concluded at 9:27 AM ET/1327 GMT
The EURUSD fell sharply on the back of the comments reaching a low of 1.08157. The price has bounced a touch and trades at 1.08287 currently.