TD Securities economists analyze the European Central Bank’s (ECB) interest rate decision and its implications for the EUR/USD pair.
Hardline (45%): Interest rate hike of 25 basis points and moderate guidance
25 basis point hike with slightly softer language in the press release. President Christine Lagarde reiterates the importance of continuing to rely on data, but softens her language around new hikes to imply that the bar is now higher for new hikes. EUR/USD +0.50%.
Base case (50%): Aggressive outlook maintained
The Committee maintains its position, but the press release remains similar to that of July. President Lagarde maintains a speech similar to that of July and reiterates that future decisions will be made based on data. EUR/USD +0.25%.
Moderate (5%): A moderate posture is maintained
The ECB maintains its stance and slightly softens the language in the press release, suggesting there is a high bar for hikes to resume. President Lagarde reiterates the need to continue to rely on data when making policy decisions, but suggests that substantial upside surprises are needed for another rise to occur. EUR/USD -0.60%.
Source: Fx Street
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