- Prior decision
- Main refinancing rate 4.25% vs 4.25% expected
- Prior 4.00%
- Deposit facility rate 3.75% vs 3.75% expected
- Prior 3.50%
- Marginal lending facility 4.50%
- Prior 4.25%
- Inflation continues to decline but is still expected to remain too high for too long
- Expectation is that inflation will drop further over the remainder of the year
- But it will stay above target for an extended period
- ECB decides to set the remuneration of minimum reserves at 0%
- This is to preserve the effectiveness of monetary policy transmission
- ECB stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target over the medium term
- To follow a data-dependent approach to determining the appropriate level of interest rates
- Full statement
There is a very subtle change in this passage here by the ECB and that is what is perhaps weighing on the euro. In June, they said that:
"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."
In July, now they are saying that:
"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."
That's indicative that they may perhaps be done with rate hikes already. EUR/USD is down from around 1.1125 to 1.1100 currently.