ECB Accounts: Uncertainty calls for caution in policy-setting and in communication

The accounts of the European Central Bank's (ECB) March policy meeting showed on Thursday that likely shocks are on the horizon, including from escalating trade tensions, and uncertainty more generally, per Reuters.

Key takeaways

"These factors could increase the risk of undershooting the inflation target in the medium term."

"Being prudent in the face of uncertainty did not necessarily equate to being gradual in adjusting the interest rate."

"Uncertainty called for caution in policy-setting and especially in communication."

"Significant expansion of fiscal policy linked to defence had the potential to derail the disinflation process."

"The combination of us tariffs and retaliation measures could also pose upside risks to inflation."

"It was argued that it was no longer possible to be confident that monetary policy was restrictive."

Market reaction

EUR/USD preserves its strength and was last seen gaining more than 2% on the day at 1.1090.