Overview
- The European Central Bank left interest rates unchanged at its meeting on Thursday.
- ECB policymaker Martins Kazaks wrote that a sizeable and pacey euro appreciation would lower the inflation outlook by hurting competitiveness and could prompt a policy response.
- Christine Lagarde said the ECB is watching markets and noted that a stronger euro could push inflation below current expectations, while judging no major recent shift in exchange rates.
- Other officials reiterated there is no foreign‑exchange target, with François Villeroy highlighting the exchange rate’s importance for activity and Yannis Stournaras calling the recent rise not dramatic.
- Analysts and traders point to the 1.20 EUR/USD area as a practical threshold after a swift rally, and the ECB says the inflation impact of earlier euro gains will show with a lag into spring and is already in its baseline forecast.