Free Trial

MNI BRIEF: ECB GovCo Keeping Options Open Amid Uncertainty

(MNI) London

December's Eurosystem staff growth projections could be revised downwards, ECB Governing Council members suggested at their meeting in October, while inflation could be revised upwards, as high fuel, energy prices and supply bottlenecks continue to feed into EZ.

Members agreed that the current 'hump' in the short-term inflation outlook is likely to fade through 2022, but there was a general acknowledgement that considerable uncertainty remains, with upside and downside risks broadly balanced. Labour market developments were discussed in the context of possible second round effects, but there was again uncertainty as to whether higher inflation will translate into durable upside pressures.

There was some concern markets had misunderstood forward guidance on rates, given expectations of a much earlier hike than guidance would suggest. Data through December was unlikely to resolve all the uncertainties around the medium-term inflation outlook and the GCl should keep sufficient optionality to allow for future monetary policy actions, including beyond its Dec meeting.

MNI London Bureau | +44 20 3983 7894 |
MNI London Bureau | +44 20 3983 7894 |

To read the full story



MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.