2017.07.2022:22:00UTC+00ECB’s Expected to Announce Tapering Plan in Fall

European Central Bank Mario Draghi tempered market expectations during his speech. But the initially dovish message by the euro area central bank was quickly overshadowed by talks of the inflation rate and an end to asset purchases.

The ECB held interest rates steady and left the asset purchases unchanged on Thursday, amid increasing speculation that it will begin to taper its ultra-loose monetary policy in the fall. The central bank also struck a somewhat dovish tone and asserted that it would be positioned to intervene should the outlook took a turn for the worst.

In its released policy statement along with its decision, it said that if outlook becomes less favorable of if the financial situation fails to keep up with the development of inflation, the Governing Council is prepared to expand the program in terms of size or duration.

The euro initially slid to $1.1489 versus the dollar after the news, reversing some of the gains it has seen in the recent weeks. The announcement also pushed up stocks on the Euro Stoxx 600 index, while the yields on the 10-year German bund was driven lower.