Nordea Research discusses its reaction to today's ECB policy outcome.
"The ECB did not unveil new monetary policy measures at the September meeting. In the press conference, the tone was surprisingly optimistic. Lagarde emphasized the success of the pandemic emergency purchase programme (PEPP), and the targeted longer-term refinancing operations (TLTROs), the GDP forecast for this year was revised up without corresponding downward revisions to growth longer out, and the core inflation forecast for 2022 was actually revised higher, likely in response to the positive impact of the EU recovery fund, national fiscal easing and support from even easier monetary policy," Nordea notes.
"EUR/USD had corrected lower in the past week and a half, as the ECB’s Lane first commented that the FX rate was a factor for the ECB and on the back of a newspaper story arguing several Governing Council members were worried about the level of the euro. Lagarde sounded much less worried today, and effectively offered the EUR/USD a free pass higher. We see upside in EUR/USD especially longer out, and the currency could yet rise to levels that worry also the ECB more," Nordea adds.