TD Securities economists analyze the European Central Bank’s (ECB) interest rate decision and its implications for the EUR/USD pair.
Hardline (25%)
The Governing Council maintains interest rates, as expected, but changes its tone slightly. In particular, the Council underlines that geopolitical instability could justify further increases if the resulting inflationary shock is large enough to be persistently transmitted to inflation expectations. EUR/USD +0.45%.
Base case (65%)
The Governing Council remains at the expected levels and maintains the language practically unchanged compared to September. So, although the Council closes the door on further increases, it essentially implies that they are very unlikely. EUR/USD -0.10%.
Moderate (10%)
The Governing Council maintains the expected position and explicitly states that the end of the tightening cycle has most likely been reached. EUR/USD -0.30%.
Source: Fx Street
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