MNI BRIEF: Likely Downward '24 Mar Inflation Projection- ECB

The European Central Bank's Governing Council stressed that headline and underlying inflation figures “had recently been continuously below the predicted levels”, suggesting a faster disinflationary process and a likely downward inflation revision for 2024 in the March projections, accounts of the January policy meeting showed on Thursday.

The GC members highlighted that staff projections tended “to underestimate changes in inflation momentum in both directions” and that these downside inflation surprises “were currently occurring in parallel with downside growth surprises and repeated signs of a stronger than expected transmission of monetary policy”, the accounts showed.

“The view was expressed that this suggested the risks to the inflation projections might be moving to the downside, especially for the short term”, the accounts showed, noting that the outlook for inflation remained clouded over the short term. (see MNI SOURCES: ECB Cut Expectations Range From 50-100BP In 2024)