ECB to Evaluate Euro Strength in March Projections (EUR)

The European Central Bank will evaluate the impact of the euro’s recent rally in its March inflation projections, according to ECB Executive Board member Piero Cipollone. The exchange rate is treated as an input to project inflation dynamics; officials will assess how revised projections align with the stronger euro. The euro has traded in a range of $1.17–$1.18 for nearly a year, with Cipollone noting the recent rally has returned to levels seen earlier in the year. ECB policy makers last week kept interest rates unchanged, with President Christine Lagarde downplaying the need for further cuts. Euro-area inflation slowed to 1.7% in January, below the ECB’s 2% target. Some officials warn a stronger euro and broader economic headwinds could prolong undershoots, with Finland’s Olli Rehn cautioning of “lower-than-expected inflation” risks.