Draghi in the press conference
- Outlook is getting worse and worse
- Previous forecasts showed rebound in Q2 but now incoming signs show weakness
- The balance of risks is on the downside
- The prolonging of uncertainty is a materializing of risks
- Draghi highlights easing bias and high degree of optionality
- We had a broad discussion, on most things we converged
- There were different nuances, as you would expect from such a broad package
- Mandate to committee is broad
- We don't like what we see on the inflation front
- Any rate cut would come with mitigating measures
- No discussion about cutting rates today
- Want to see next round of projections before taking action
- It's difficult to be gloomy today
- The risk of recession is pretty low
- If weakness continues, fiscal policy becomes of the essence
- Looking forward to what the committee comes up with (on options for easing)
Draghi downplayed the lack of unanimity but the market has picked up on it. Overall, this rally in the euro is more of a squeeze than anything fundamental. I wouldn't rule out something in EUR/CHF as the driver here.
Update: The comments about mitigating action is somewhat EUR bullish but it's better news for the banks. The euro is also rallying on the comment that there was no discussion of a rate cut today.
