European session review: EUR edges up after the announcement of ECB’s monetary policy decisions

EUR ticked up against its major rivals in the European session on Thursday after the release of the European Central Bank’s (ECB) monetary policy statements, which, in general, offered nothing new for market participants. 

At the ECB’s January gathering, its policymakers decided to take no action on interest rates or monetary stimulus, as widely expected. The Bank’s main refinancing rate, marginal lending facility rate and the deposit facility rate were left unchanged at  0.00 percent, 0.25 percent and -0.50 percent, respectively. The ECB’s officials also repeated the pledge to continue the purchases under the pandemic emergency purchase programme (PEPP) with a total envelope of EUR1,850 billion. The purchases under the PEPP were reiterated to be conducted until at least the end of March 2022 and, in any case, until the ECB’s governing council judges that the coronavirus crisis phase is over. The Bank also repeated its promise to continue to provide ample liquidity through its refinancing operations (in particular, TLTRO III) as well as to continue purchases under the asset purchase programme (APP) at a monthly pace of EUR20 billion.

The announced outcomes of the ECB’s latest meeting were in line with investors’ expectations. Market participants’ attention is now turning towards the press conference by the ECB’s President Christine Lagar (due at 13:30 GMT), during which she may provide ECB’s views on a potential impact of the latest round of stricter lockdown measures in Europe on the region’s economy, progress on the roll-out of vaccination across the EU, a rapid strengthening of EUR and inflation expectations.