Commenting on the ECB Maintaining a Dovish Tone

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  • 10.06.2021 03:30 pm

Commenting on the ECB Monetary Policy Statement and maintaining a dovish tone, Jesus Cabra Guisasola, Associate at Validus Risk Management, said: “As most market participants expected, the ECB maintained its dovish tone and decided to leave its ultra-loose policy unchanged by keeping the current PEPP purchases at the fastest pace for the third quarter of 2021."

“While there are clear signals of optimism around the European economy, after a pickup in vaccinations and falling coronavirus cases. There are still uncertainties surrounding the euro-area and its recovery.  

“The pandemic is leaving a legacy of high debt and weak balance sheets with an uneven recovery between southern and northern European economies. Hence, the ECB prefers to continue with its wait-and-see monetary policy stance and not disrupt the funding market in the short term.  

“An environment where the European economy recovers at different paces with inflation below the 2% target, could lead to a weaker euro. Nevertheless, there is a market consensus for a weaker dollar in the coming months and we could see EURUSD testing 1.25, a level not seen since early 2018.”

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