Lagarde Q&A: Slight change of a verb was not random or irrelevant

<p>The verb that was removed from the statement was that 'be brought' was taken out of this:</p><p>"The Governing Council’s future decisions will ensure that the key ECB interest rates will be brought
to levels sufficiently restrictive to achieve a timely return of
inflation to the 2% medium-term target and will be kept at those levels
for as long as necessary."</p><p>Now it's:</p><p>"The Governing Council’s future decisions will ensure that the key ECB interest rates will be set
at sufficiently restrictive levels for as long as necessary to achieve a
timely return of inflation to the 2% medium-term target."</p><ul><li>This is the ninth decision to hike in 1 year</li><li>Decision was unanimous</li><li>Slight change of a verb was not random or irrelevant </li><li>We are deliberately data dependent</li><li>We may hike, we may hold</li></ul><p>There's still a hawkish bias here but if the European numbers continue to disappoint and inflation starts to fall quicker, it sounds like they could be done.</p><ul><li>We are not in the domain of forward guidance but we are very strongly rooted in our desire to break the back of inflation</li><li>Notes that there will be two readings of inflation before Sept meeting, we have an opening mind on Sept and beyond</li><li>We have not discussed the reduction of our balance sheet</li><li>Declines to repeat that they're not even thinking about stopping hiking</li><li>We know we are getting closer but the options of continuing to hike or hold are available</li><li>We only know that we won't be cutting rates</li><li>Do we have more ground to cover? At this point I wouldn't say so</li></ul><p>That last line was the kicker and sent the euro down to 1.1015. It sounds like a slip but it's big.</p>

This article was written by Adam Button at www.forexlive.com.