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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.