ECB summary: Lagarde offers a ray of hope for more easing

• ECB sees slightly better data in line with expectations
• Policy review will not impact decisions this year
• Markets nervous as the Chinese virus spreads

The ECB made no history today. All the policy parameters were left unchanged and Lagarde made it clear the Bank had no intention of changing them any time soon. She noticed slightly better economic data (including inflation) but said it was in line with expectations and thus having no impact on policy perception. Then again, she suggested that if growth doesn’t pick up the ECB “must think on which part of the curve to act”, clearly suggesting that some additional asset purchases are still possible. This seems to be a prime reason behind a dip lower on the ECB chart.

False breakout? A similar move in 2019 led to a sharp correction. Source: xStation5

The ECB also launched a long heralded strategy review but details remain scarce. The statement says it may last for the whole year and will address the main point – how to deal with inflation that is too low with policies that were initially employed for reducing it. Lagarde said that it will not have an impact on policy decisions this year so markets will not pay that much of attention in coming months. Such tone could be normally supportive for European indices but the attention is completely not there – investors are becoming more and more nervous amid news that the coronavirus has already spread to North America and Europe. DE30 is down but the real impact is seen on the oil market which is literally crashing.