ECB accounts: It is still too early to declare victory in the fight against inflation

  • Disinflationary process is well on track
  • Inflation had turned out lower than expected in September
  • Upside risks to inflation are also now seen as lower
  • Inflation would probably reach 2% target somewhat earlier
  • But still too early to declare victory in the fight against inflation
  • A few members initially expressed a view that they would have preferred to accrue more information and to wait until December
  • The closer rates are to neutral territory, the more cautious one would have to be that monetary policy itself did not become a factor in slowing down the pace of disinflation
  • Full accounts

One interesting line is that policymakers noted “acting now could provide insurance against downside risks of undershooting inflation target”. I guess that might not be something they should be too worried now. With Trump tariffs looming large, the outlook has changed considerably for the ECB. And that is a key risk to take into account when they enter into discussions in December.

This article was written by Justin Low at www.forexlive.com. Source