• Prior decision

• Deposit facility rate -0.50%
• Main refinancing rate 0.00%
• Marginal lending facility 0.25%

• APP purchases to end on 1 July
• Intends to raise key interest rates by 25 bps at July meeting
• Looking further ahead, ECB expects to raise rates again in September
• Inflation pressures have broadened, intensified
• Will maintain optionality, data dependence, gradualism and flexibility
• Inflation seen at 6.8% in 2022, 3.5% in 2023, 2.1% in 2024
• GDP growth seen at 2.8% in 2022, 2.1% in 2023, 2.1% in 2024
• Full statement

The euro got a bit of a whipsaw with a push to 1.0748 before falling back down to 1.0688 and is now keeping around 1.0700 against the dollar. The key passage is that the ECB „intends“ to hike rates by 25 bps in July but they are leaving the option for a potential 50 bps rate hike in September though. On the latter, the statement reads:

„Looking further ahead, the Governing Council expects to raise the key ECB interest rates again in September. The calibration of this rate increase will depend on the updated medium-term inflation outlook. If the medium-term inflation outlook persists or deteriorates, a larger increment will be appropriate at the September meeting.“

That will come down to inflation data in the months ahead but for now, the euro is being knocked around a little as the hawkish bets (even if it were to be little to begin with) coming into the meeting are put off – for July at least.

Besides that, the ECB raises its inflation forecasts and cuts its growth forecasts – which is very much expected. Lagarde will come next at 1230 GMT.

This article was written by Justin Low at www.forexlive.com.