The July ECB meeting yesterday turned out to be something of a disappointment for traders, given that the event failed to provoke any meaningful directional moves. While no policy adjustments were expected ahead of the meeting, the focus was on the bank’s outlook. With the ECB having recently announced an upward revision to its inflation target (now at 2% from close to 2%), the market was expecting Lagarde to drive home a heavily dovish message.
ECB To Remain Accommodative
Broadly speaking, the meeting was a dovish event. The ECB underscored its new inflation target and reaffirmed its commitment to maintaining an easing presence in the market. Indeed, Lagarde said that the bank raised its inflation target to “underline its commitment to maintain a persistently accommodative monetary policy stance to meet its inflation target”.