The verb that was removed from the statement was that 'be brought' was taken out of this:
"The Governing Council’s future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary."
Now it's:
"The Governing Council’s future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target."
- This is the ninth decision to hike in 1 year
- Decision was unanimous
- Slight change of a verb was not random or irrelevant
- We are deliberately data dependent
- We may hike, we may hold
There's still a hawkish bias here but if the European numbers continue to disappoint and inflation starts to fall quicker, it sounds like they could be done.
- We are not in the domain of forward guidance but we are very strongly rooted in our desire to break the back of inflation
- Notes that there will be two readings of inflation before Sept meeting, we have an opening mind on Sept and beyond
- We have not discussed the reduction of our balance sheet
- Declines to repeat that they're not even thinking about stopping hiking
- We know we are getting closer but the options of continuing to hike or hold are available
- We only know that we won't be cutting rates
- Do we have more ground to cover? At this point I wouldn't say so
That last line was the kicker and sent the euro down to 1.1015. It sounds like a slip but it's big.
