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Draghi walks back on easing bias omission


  • Euro pares earlier gains as Draghi walks back on easing bias ommision
  • Growth forecasts revised higher
  • Inflation projections moved down

The Draghi press conference following the most recent ECB rate decision, where all rates were unanimously kept on hold has seen a paring of the initial moves with the Euro falling back a little. The Italian was keen to stress that the dropping of the line in the monetary statement that referred to an easing bias wasn’t a major change in policy.

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 The EURUSD rallied on the rate decision when the statement missing the easing bias line was released. However the gains were pared when Draghi spoke and walked back on these comments. Source: xStation

The statement that "If the outlook becomes less favourable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the asset purchase programme (APP) in terms of size and/or duration" was dropped from the statement and the market at first took this as a hawkish signal.

During the Q&A session Draghi pointed out the context of that statement saying that it was first introduced in 2016 when the outlook was quite difference and therefore that it "does not signal change in expectations or reaction function." 

The statement also included the latest growth and inflation forecasts, with growth for 2018 revised higher and inflation next year slightly lower. The full projections are as follows:


 2018 at 2.4% vs 2.3% prior

2019 at 1.9% vs 1.9% prior

2020 at 1.7% vs 1.7% prior


2018 at 1.4% vs 1.4%

2019 at 1.4% vs 1.5%

2020 at 1.7% vs 1.7%

 The DE30 has made a fairly strong move higher in the past hour and in doing so the market has broken above potentially important resistance. The region around 12280 has previously been defended by the sellers but in breaking above here the market could be set for a move to the upside. 

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 The DE30 reacted positively when the Euro began to fall back and has moved to its highest level of the month above 12280 in the past hour. Source: xStation


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