ECB policy rate kept unchanged; recap of the points from Draghi's press conference [From Mr. YEN's newsletter]
From the investment newsletter "Real Top Trading" by Yenzo, provided by GogoJungle, here are some excerpts from today’s issue.
The ECB kept its key policy rate at 0% as expected and the deposit facility rate at -0.4%.
In the statement, it said it had instructed staff to consider additional easing options, including a strengthening of forward guidance on policy rates.
It shifted its outlook from 【holding the policy rate at the current level until mid-2020】 to 【moving in the current level or below through the first half of 2020】.
Using these two as references, the rate rose to 1.1160 on hold, then fell to 1.1102, rebounded to 1.1187, and has since hovered around 1.1160. The euro against the yen rose to 120.60, then fell to 120.05. The 120 yen level provided support again and it rose to around 121.35, settling around 121.10.
The statement was dovish, but somewhat within expectations, which is thought to be the reason for the rebound after the decline.
Key points from Draghi's press conference are
Growth in Q2 and Q3 is expected to slow
Geopolitical factors, rising protectionism, and vulnerability in emerging markets particularly damage manufacturing
However the risk of a recession is low; the current situation is undesirable, and that justifies taking action
If the mid-term inflation outlook remains below the target, policymakers will firmly take action
Regarding the deletion of the phrase that the medium-term inflation target is "slightly below 2%", this implies that there is no upper limit at 2%, and inflation will fluctuate around itIn this period, US initial jobless claims were 206,000, down 10,000, the lowest in three months; June US durable goods orders rose 2% month-over-month, above the 0.7% expected
Core capital goods orders, a leading indicator of private fixed investment, rose 1.9% month-over-month versus 0.2% expected; although the figures were strong, the view that equipment investment sharply declined in Q2, contributing to GDP downward pressure, remains unchanged.
Quoted from Yenzo’s real-time newsletter “Real Top Trading” (Dake Yashiro).
ECB’s policy rate decision was broadly in line with expectations, but it is important to note that the statement hinted at possible future rate cuts. (Editorial staff)
