The euro was stronger today European Central Bank President Mario Draghi left the key minimum bid rate unchanged and detailed the program of unlimited sterilized purchases of sovereign bonds. Such decision was expected by Forex market participants, but was well-received nevertheless.
The ECB left its main interest rate at 0.75 percent. Draghi explained in the statement:
Owing to high energy prices and increases in indirect taxes in some euro area countries, inflation rates are expected to remain above 2% throughout 2012, to fall below that level again in the course of next year and to remain in line with price stability over the policy-relevant horizon.
The central bank revised its growth projections down:
The September 2012 ECB staff macroeconomic projections for the euro area foresee annual real GDP growth in a range between -0.6% and -0.2% for 2012 and between -0.4% and 1.4% for 2013. Compared with the June 2012 Eurosystem staff macroeconomic projections, the ranges for 2012 and 2013 have been revised downwards.
Draghi also announced the bond-buying program:
As announced on 2 August 2012, the Governing Council of the European Central Bank (ECB) has today taken decisions on a number of technical features regarding the Eurosystemâs outright transactions in secondary sovereign bond markets that aim at safeguarding an appropriate monetary policy transmission and the singleness of the monetary policy.
EUR/USD rose from 1.2599 to 1.2624 as of 15:20 GMT today. EUR/GBP rose a little from 0.7922 to 0.7926. EUR/JPY jumped from 98.80 to 99.64.
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