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De Cos: ECB Must Be Extremely Vigilant Of Inflation Expectations

ECB
  • Bloomberg reports Bank of Spain chief De Cos saying the ECB must be extremely vigilant of inflation expectations, with a risk of possible de-anchoring. These comments build on Sep 19 that de-anchoring price expectations would be the worst scenario.
  • Whilst little changed in the past few days, there has indeed been an upward trend in long-term 5Y5Y EUR inflation swaps since late July, in contrast to those in the US which have held more stable but albeit at higher rates to start with [see chart].
  • He also adds that that Eurozone Q3 data points to a sharp economic slowdown whilst noting the Bank of Spain will cut its 2023 economic growth forecast.

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