- Prior decision
- Deposit facility rate 3.25% vs 3.25% expected
- Prior 3.50%
- Main refinancing rate 3.40% vs 3.40% expected
- Prior 3.65%
- Marginal lending facility 3.65%
- Prior 3.90%
- Incoming information shows that the disinflationary process is well on track
- The inflation outlook is also affected by recent downside surprises in indicators of economic activity
- Inflation is expected to rise in the coming months, before declining to target in the course of next year
- Will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction
- It will be based on the assessment of the inflation outlook, incoming economic and financial data
- Not pre-committing to a particular rate path
- Full statement
Besides the rate cut itself, there are no changes to the policy communication by the ECB. So, this makes it a rather straightforward one. It is only in the first paragraph that they alluded to “recent downside surprises” in economic data. That would be their rationale for acting in back-to-back months.
Traders are still anticipating another rate cut in December with ~122 bps of rate cuts more until June next year. That would represent a 25 bps rate cut at each meeting until then.
EUR/USD is sitting flattish still, keeping around 1.0865 and not much changed from the decision announcement. It’s now over to Lagarde to bring it home.