EUR/USD: Dec ECB: A Knee-jerk Response To ECB's Strong New Staff Projections - SEB

SEB Research discusses the reaction to today's ECB December meeting, and notes a knee jerk reaction in EUR/USD after spiking initially in response to the higher staff projections before dropping back towards pre-meeting levels and continued slightly lower after.

"As we expected, the ECB Governing Council, in today’s final 2017 meeting, left all policy tools - rates, asset purchases and, importantly, also forward guidance – unchanged. ECB staff projections were strongly revised up for GDP growth and, to a lesser extent, for inflation.

Contrary to our expectation, the central bank gave no further details regarding the future composition of asset purchases after the € 30bn reduction in January 2018. The ECB re-iterated its call for Eurozone governments to step up the pace for structural reforms and increase efforts to strengthen the institutional architecture of European Monetary Union.

In the press conference, Mario Draghi once again managed to express increased confidence and at the same time dispel the notion that the ECB was in under any pressure to withdraw stimulus more swiftly than previously anticipated," SEB notes.

Source: SEB Research

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