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EUR: Unintended consequences of the ECB – Lloyds Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 16, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    Gajan Mahadevan, Research Analyst at Lloyds Bank, suggests that there are unintended consequences of last week’s President Draghi’s press conference on the EUR.

    Key Quotes

    “ECB monetary policy meeting was key for EUR sentiment. President Draghi announced a variety of additional policy measures to stimulate the euro area economy and raise inflation prospects. These included a reduction in interest rates and an increase of €20bn in the size of its monthly asset purchase programme. His comments that the ECB didn’t “see the need for further interest rate cuts” caused a sharp rally in EUR.

    Given that the ECB appears to favour a weaker currency – to help drive inflation higher – it is likely to be frustrated (yet again) that its stimulus efforts have not had the desired impact on the currency.”
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