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MNI ECB Preview - October 2021: Pushing Back Against the Market

MNI ECB Preview - October 2021: Pushing Back Against the Market

For the full publication, please see: ECB Preview October 2021.pdf

EXECUTIVE SUMMARY:

  • Coming mid-quarter and following President Lagarde's indication that major policy decisions will be announced in December, the October ECB meeting will be a relatively low-key event.
  • That is not to say that the meeting will be entirely uneventful. The ECB is likely to push back against the recent hawkish shift in market rate expectations and restress the forward guidance.
  • The ECB will also stick to the argument that the current inflation spike is largely transitory and that monetary policy needs to remain accommodative.
  • However, maintaining this position is becoming more challenging as inflation pushes higher and the Fed and BoE turn more hawkish.

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