ECB Press Conference: Lagarde speaks on policy outlook after leaving rates unchanged in October
Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to leave key rates unchanged at the October policy meeting and responds to questions from the press.
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ECB press conference key quotes
"Manufacturing is held back by tariffs."
"Divergence between domestic and external demand is expected to persist."
"Economy to benefit from consumption."
"Labour demand has cooled."
"Household savings are unusually large."
"Labour costs to moderate further."
"Forward-looking wage indicators point to slower wage growth this year."
"Measures of longer term inflation expectations around 2%."
"Some growth downside risks have been mitigated."
"Trade environment is volatile."
"Outlook for inflation more uncertain than usual."
"Stronger euro could bring down inflation further than expected."
"Defence spending boost could increase inflation in medium term."
"We are in a good place, will do whatever is needed to stay in a good place."
"Would not complain about growth; could do better."
"Corporates are moving ahead with AI investment."
"Labour impact of AI will take time."
This section below was published at 13:15 GMT to cover the European Central Bank's (ECB) monetary policy announcements and the immediate market reaction.
The European Central Bank (ECB) announced on Thursday that it left key rates unchanged following the October policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.15%, 2.4% and 2%, respectively.
ECB policy statement key takeaways
"Inflation remains close to 2% medium-term target and ECB’s assessment of inflation outlook is broadly unchanged."
"Economy has continued to grow despite the challenging global environment."
"Robust labour market, solid private sector balance sheets and ECB’s past interest rate cuts remain important sources of resilience."
"However, outlook is still uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions."
"ECB is determined to ensure that inflation stabilises at its 2% target in medium term."
"Will follow a data-dependent and meeting-by-meeting approach to determining appropriate monetary policy stance."
"ECB’s interest rate decisions will be based on its assessment of inflation outlook and risks surrounding it, in light of incoming economic and financial data, as well as dynamics of underlying inflation and strength of monetary policy transmission."
"ECB is not pre-committing to a particular rate path."
"APP and Pandemic Emergency Purchase Programme (PEPP) app and PEPP portfolios are declining at a measured and predictable pace, as Eurosystem no longer reinvests principal payments from maturing securities."
Market reaction to ECB policy decision
EUR/USD stays under bearish pressure following the ECB's policy announcements and was last seen losing 0.4% on the day at 1.1555.
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.38% | 0.54% | 1.03% | 0.49% | 0.57% | 0.60% | 0.41% | |
| EUR | -0.38% | 0.15% | 0.68% | 0.11% | 0.17% | 0.22% | 0.03% | |
| GBP | -0.54% | -0.15% | 0.51% | -0.04% | 0.03% | 0.07% | -0.11% | |
| JPY | -1.03% | -0.68% | -0.51% | -0.58% | -0.49% | -0.48% | -0.67% | |
| CAD | -0.49% | -0.11% | 0.04% | 0.58% | 0.09% | 0.11% | -0.07% | |
| AUD | -0.57% | -0.17% | -0.03% | 0.49% | -0.09% | 0.05% | -0.14% | |
| NZD | -0.60% | -0.22% | -0.07% | 0.48% | -0.11% | -0.05% | -0.16% | |
| CHF | -0.41% | -0.03% | 0.11% | 0.67% | 0.07% | 0.14% | 0.16% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
This section below was published as a preview of the European Central Bank's (ECB) monetary policy announcements at 05:00 GMT.
- The European Central Bank is expected to hold key rates unchanged for the third meeting in a row on Thursday.
- ECB President Lagarde’s words will be closely scrutinized amid stable Eurozone inflation and improving economic activity.
- The ECB policy decision and Lagarde’s press conference are set to boost volatility in EUR/USD.
The European Central Bank (ECB) is expected to stand pat for the third consecutive monetary policy meeting, holding the interest rate on the main refinancing operations, the marginal lending facility and the deposit facility at 2.15%, 2.4% and 2%, respectively. The decision will be announced on Thursday at 13:15 GMT.
The interest rate decision will not be accompanied by the staff’s updated economic projections, but will be followed by ECB President Christine Lagarde’s press conference at 13:45 GMT.
The EUR/USD pair will likely experience intense volatility following the ECB’s policy announcements, as Euro (EUR) traders will look for fresh signals on whether the central bank is done with its rate-cutting cycle.
What to expect from the ECB interest rate decision?
During the press conference following the September meeting, ECB President Lagarde highlighted that the “domestic economy is showing resilience.”
While commenting on the inflation outlook, Lagarde said: "The disinflationary process is over. We are still in a good place and inflation is where we want it to be."
The latest inflation and economic activity data justified her words, with the core Eurozone Harmonized Index of Consumer Prices (HICP) ticking up to an annual rate of 2.4% in September, compared to 2.3% previously, but remaining close to the central bank’s 2% inflation target.
Meanwhile, the bloc’s preliminary October HCOB Composite Purchasing Managers’ Index (PMI) climbed to 52.2, the highest level since May 2024, as both the manufacturing and services sectors performed stronger-than-expected in the reported period.
The preliminary reading of the Eurozone’s third-quarter Gross Domestic Product (GDP) is due for release on Thursday, a few hours before the ECB policy verdict, and is expected to have increased by 0.1% on the quarter, at the same pace seen in the previous period.
Against this backdrop, it seems that ECB President Lagarde and some of her colleagues have set a high bar for further easing, with industry experts and analysts expecting the central bank to be unlikely to reduce rates until March next year.
“The swaps market continues to price in about 50% odds that the ECB delivers one more 25bps cut in the next 12 months and the policy rate to bottom at 1.75%,” analysts at BBH noted.
Previewing the ECB policy announcement, analysts at TD Securities (TDS) said: “While growth is slowing into year-end, there's no need for President Lagarde to change her tone from September's decision, reinforcing an ECB that is happy where it is, but ready to act should risks emerge.”
How could the ECB meeting impact EUR/USD?
EUR/USD remains confined within a narrow range below the 1.1650 barrier in the lead up to the ECB showdown, undermined by the recent US Dollar (USD) resurgence.
Additionally, the French political drama somewhat weighs on the Euro (EUR), acting as a headwind for the pair.
Bloomberg reported on Sunday, “French lawmakers didn’t vote on a Socialist proposal for a wealth tax Saturday, delaying a possible compromise in a budget debate that risks toppling the fragile minority government of Prime Minister Sebastien Lecornu.”
In case the ECB Monetary Policy Statement (MPS) or President Lagarde sticks to the bank’s rhetoric of being "in a good place" or explicitly hints that it is done with rate cuts, it could revive the EUR/USD recovery.
On the other hand, EUR/USD could witness a fresh selling wave should the ECB voice concerns about slowing economic growth, suggesting that the door remains ajar for future interest rate cuts.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, highlights key technical levels for trading EUR/USD following the monetary policy announcement.
“EUR/USD settled below the critical 21-day Simple Moving Average (SMA) at 1.1638 on Wednesday, incurring heavy losses. Meanwhile, the 14-day Relative Strength Index (RSI) indicator stays bearish while below the 50 level. The daily technical setup, therefore, suggests that downside risks will likely persist.”
“A sustained break below the 1.1575 demand area will fuel a fresh sell-off toward the October low of 1.1542. Further south, sellers could find a strong hurdle at the 1.1500 round figure. Conversely, scaling the 21-day SMA barrier will put the confluence zone around 1.1670 back in focus. The 100-day and 50-day SMAs close in near that level. The next topside targets are aligned at the October 17 high of 1.1728, followed by the 1.1800 mark,” Dhwani adds.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.