EUR flows: EUR little changed after ECB leaves rates unchanged

The ECB statement is fairly neutral. There was some attempt to play down the rise in inflation in May, as the statement notes that “While some measures of underlying inflation ticked up in May owing to one-off factors, most measures were either stable or edged down in June.” But they also said they were data dependent, would not pre-commit to any action and noted “domestic price pressures are still high, services inflation is elevated and headline inflation is likely to remain above the target well into next year.” The statement also says it will keep policy rates sufficiently restrictive for as long as necessary to achieve the 2% target. A September rate cut remains priced as around a 65% chance and EUR/USD is not significantly changed. There may be more reaction to the Lagarde press conference in a couple of hours.