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Euro jumps as ECB keeps mum on currency, dashes hopes for further stimulus

Thu, 10th Sep 2020 13:19

(Sharecast News) - The European Central Bank poured cold water on expectations for further easing and that it would push pack on recent strength in the single currency.
During her press conference, ECB President, Christine Lagarde, conceded that euro strength could negatively impact on prices and said that the Governing Council was watching it closely.

"We can discuss, endlessly, whether economists' dovish expectations were "right", but the conclusion after today's performance is clear; the consensus appears to have been way ahead of the ECB on the prospect of further stimulus, said Claus Vistesen at Pantheon Macroeconomics.

Regardless, as of 1510 BST euro/dollar was climbing by 0.85% to 1.1903.

In her introductory remarks, together with ECB vice-president, Luis de Guindos, she said: "The strength of the recovery remains surrounded by significant uncertainty, as it continues to be highly dependent on the future evolution of the pandemic and the success of containment policies."

Lagarde made the same point in her presser, saying that the risks to the euro area remained tilted to the downside.

ECB staff did however bump up their forecasts for Eurozone GDP growth in 2020 to -8.0%, with a rebound of 5.0% penciled-in for 2021 and of 3.2% in 2022.

Furthermore, according to Lagarde those projections did not incorporate recently approved stimulus measures.

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