More from ECB Knot: Would prefer a tolerance band around target rate

  • Italian spreads have increased recently because of budget issues
  • Unemployment cost of disinflation is benign compared to previous policy tightening cycles
  • Would prefer a tolerance band around target rather than a strict point target for inflation
  • ECB stands ready to respond to new upside risks should they materialize

Meanwhile ECB’s Vasle adds:

  • Very close to rate peak
  • Impossible to tell today if we are done or more could be needed

ECBs Kazimir:

  • For the moment, we are fine with the current level of rates

ECB chatter is that of hope that economy is slowing, inflation will slow further and a soft landing will be forthcoming.

This article was written by Greg Michalowski at www.forexlive.com. Source