Why The ECB Should Refrain From Commenting The Exchange Rate

Fast forward two weeks from the moment Philip Lane commented on the rates, the ECB changed its attitude at the press conference. Indeed, it included the exchange rate in its statement, but in a way it did so in the past. Moreover, during the press conference, it refrained from engaging in discussions about the exchange rate, just pointing out that it is closely watching the Euro’s strength as it weighs on inflation.

What is curious is that Lane’s comment was in particular about the EURUSD exchange rate, not the Euro in general. It tells us that what happens on the other side of the Atlantic is closely watched by European policymakers.

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