Lagarde Adds Policy Transmission to List of Inflation Drivers

Lagarde continues:

• Inflation is likely to come down further. September’s decline was broad based. Food price inflation slowed again, but remains high by historic standards. The fall in core inflation was supported by previous decline in energy prices and the impact of tighter monetary policy on demand and corporate pricing power.
• Goods and services inflation rates fell substantially with the latter being pulled down by pronounced base effects. Price pressures in tourism and travel appear to be moderating. Measures of underlying inflation show decline, but domestic price pressures are still strong.
• Measures of longer term inflation expectations mostly stand around 2% but some indicators remain elevated and need to be monitored closely. Risks to growth are tilted to the downside.

We note that the ECB have added monetary policy transmission to the list of drivers for slowing inflation.