ECB: Holding course while monitoring the EURO

Highlights:

• At today’s meeting the Governing Council decided not to act, in line with expectations.
• The macro projections were all in all slightly revised upwards while risks remain on the downside.
• However, the Governing Council made clear that it will “carefully assess” the impact of the EUR appreciation on inflation.
• Moreover, President Lagarde made clear – as already at the July meeting – that the PEPP will likely be fully implemented.
• The ECB maintained its easing bias but unless downside risks materialize further bold ECB actions do not seem imminent in October. But we deem an extension of the PEPP at the December meeting more likely than not.