EUR/JPY is under pressure over ECB

• EUR/JPY pressured over the ECB event.
• ECB´s Laggard is speaking to the press following the 50 bp rate hike. 

EUR/JPY is under pressure, down by some 0.7% as the Euro sells off due to the rate hike by 50bps today by the European Central Bank, taking the deposit rate to 3.00%.

The ECB also highlighted that it will regularly assess how TLTROs are affecting its monetary policy stance. ´´The bottom line here is that the Governing Council remains highly concerned about inflation: the first sentence of the release is "Inflation is projected to remain too high for too long". This does not sound like an ECB that wants to stop hiking rates yet, but the statement does fairly reflect the heightened uncertainty going forward,´´ analysts at TD Securities said. 

ECB rate hike 

• Main refi rate at 3.50% vs 3.00% prior.
• Raises interest rate on marginal lending facility to 3.75% vs 3.25% prior.
• Deposit facility to 3.00% vs 2.50% prior.

ECB statement key notes

• Refrains from signalling future rate moves in statement.
• Inflation projected to remain too high for too long.
• Headline inflation expected to average 5.3% in 2023, 2.9% in 2024 and 2.1% in 2025.
• Forecasts done before market turmoil.
• Elevated level of uncertainty reinforces importance of a data-dependent approach to ECB policy decision, which will be determined by its assessment of inflation outlook in light of incoming data and dynamics.
• Banking sector sector is resilient, with strong capital and liquidity positions
• Policy toolkit is fully equipped to provide liquidity support to eurozone financial system if needed.

Meanwhile, markets are now pricing the terminal rate at 3% and the Euro is under pressure.

Markets are now tuned in to the ECB Governing Council Press Conference:

Watch Live: ECB Governing Council Press Conference 

ECB President Christine Lagarde explains the Governing Council's monetary policy decisions and is taking questions from journalists at the Governing Council press conference.

The key here is how the governor is guiding the markets in terms of the path of rate hikes given the lack of substance in the statement. 

Lagarde speech: Can exercise creativity in short order if there is a liquidity crisis

Lagarde speech: Wage pressures have strengthened

Lagarde speech: Monitoring market tension closely