ECB’s reaction function has not changed materially – Rabobank

Commenting on the European Central Bank's (ECB) policy statement, "the ECB’s guidance on rates received a slightly dovish update, as expected," noted Rabobank analysts.

Key quotes

"By shifting their focus on reaching the 2% aim “well ahead” of the end of their projection horizon, the ECB conveyed the message that its monetary accommodation will be persistent."

"We believe that the ECB’s reaction function has not changed materially. However, with more emphasis on the midpoint of the staff projections, the ECB may have added some downward bias to the markets’ response to inflation data and forecasts."