Summary:

  • ECB president’s press conference contains no major revelations
  • Draghi: forecasts signal strong pace of economic growth
  • Euro coming under pressure since the speech

With the ECB keeping rates on hold earlier as widely expected, the attention turned to Mario Draghi as the president conducted his customary press conference. The event itself didn’t see any major revelations but the Italian was keen to nip any over enthusiasm regarding upwardly revised growth forecasts in the bud, with some slightly dovish comments on inflation. 

Selected comments from the opening statement are shown below:

  • New forecasts signal strong pace of economic growth
  • Very favourable financial conditions still needed
  • Domestic price pressure remain muted and have yet to show signs of a convincing trend
  • Ample degree of stimulus still needed for inflation
  • Better growth outlook increases ECB’s confidence that inflation will converge on target

Following the opening statement there was the usual Q&A which also provided some noteworthy comments as follows:

  • Forecast revisions go in the right direction 
  • The forward guidance on interest rates is unchanged
  • The news on inflation remains somewhat muted

Overall its much the same here with nothing sensational but the cautious tones regarding inflation could be perceived to be a little dovish. The Euro certainly seems to think so anyway, with the singe currency falling lower since the event began. The EURUSD spiked higher just after he began speaking but the inflation comments have seen a bit of a reversal and the pair is now back around 1.18 – 60 pips off the daily highs.

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 The EURUSD initially rallied but has since fallen following some of Draghi’s comments: Source: xStation

 Overall the reaction isn’t as apparent in other market with the German 10 year bond (BUUND 10Y on Xstation) for instance not seeing a clear move. Note the Bund moves inversely to rates and therefore dovish comments would be seen as positive for the price of the Bund.  

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 The reaction in the bond market suggests that today’s event wasn’t especially dovish. Source: xStation