The European Central Bank or ECB declared that there is not any change in their monetary policy and interest rate. The pandemic fund program for 1.859 billion Euro is still continued as well. 

The Governor representative will continue the asset purchase program to handle the impact of pandemic. That fund can be done at least until the end of May 2022 or until the pandemic crisis phase is finished. 

Market considered that there is not something new in that declaration. They are actually hoping for a clue about the stimulus tapering. In addition, the market also tries to understand the announcement from Christine Lagarde. 

She is the ECB president who stated an announcement after the monetary policy release. Generally, she is so optimistic about the European economy outlook. However, ECB must not follow The Fed’s policy. 

The Economy Recovery Between Each Region Is Different

It is reasonable if ECB must not always follow the Fed’s policy, especially about the tapering. The reason is that the economy recovery expectation and European Union – USA inflation is so different. 

For your information, the EuroZone was significantly increased last Month, but it still so far from the US inflation. The yearly EuroZone also increased. That was from 0.9% to 1.3% in March. 

Meanwhile, the US inflation increased from 1.7% to 2.6% in March. That is why;  Lagarde stated again that the ECB and The Fed policy cannot be run together. She projected that the EuroZone level is better. 

It will come back to the pre-pandemic level. However, she also warned about the divergence. ECB itself will consider the financial and outlook Inflation to decide the asset buying speed. 

Why EUR / USD Slipped

It is known that Euro was weakened to the US dollar while responding the ECB monetary policy. EUR / USD fallen for 0.32% to 1.1997 when this news written many hours after the ECB press conference. 

Based on an expert, there are some reasons why this thing can happen. The first is a fact that ECB still think that outlook will be still surrounded by uncertainty. That is why; they take a further action. 

ECB then takes the accommodated policy again. Furthermore, they also fail to give any clues about what will be happened next by not saying the changes of any plan. The USD is then stronger. 

It is especially after that currency responded to the newest jobless claim data which is worse during the pandemic. Overall, those are the possibilities why then the EUR / USD slipped in the market.

Bank of Canada Increased The Economic Outlook

Elsewhere, the Bank of Canada increased the economic outlook significantly although it doesn’t change the interest rate. In a release, that Bank expects that the slow condition can be reduced. 

The market then gave a response for that statement as an indication OF BOC interest rate increase which is faster than the expectation before. In a Monetary Policy Report released by BOC, pandemic is also stated.

They thought that the lost caused by any policies made due to the pandemic will be smaller than the initial estimation. BOC is now expecting that the Canadian economy can grow up to 6.5%.

Maintaining The Low Interest Rate

BOC stated that they still in their commitment to maintain the low interest rate. That will be done until the economy slowdown reduced so that the 2% inflation target can be reached continuously. 

Based on the newest projection from the Central bank, the inflation target may be reached at least someday in the middle of 2022. They also warned about the projection timing which  is uncertain. 

In its report, ING thought that the BOC statement is quite surprising especially after seeing the increase of COVID-19 cases which are lately happened in some countries. The Canadian performance is quite good.