The ECB responds to changes in the Euro/US Dollar exchange rate by adjusting interest rates, but the effects are small. The researchers used a method based on high-frequency data to measure this reaction. They found that a 1 point increase (decrease) in the exchange rate leads to a decrease (increase) of around 20 basis points in the three-month interest rate. This suggests that the ECB only adjusts interest rates in response to exchange rate movements if it impacts the economy's expected inflation and future output.