- Drop in inflation observed in past few months is positive
- But not enough to declare victory and move on to next stage
- Increasingly confident that inflation will reach target in 2025, can achieve soft landing
- Policy mistake of easing too early would be more significant than tightening for too long
- Closely watching economic indicators, not making any hasty moves
- Need to see clear signs of wage moderation
The pushback by the ECB continues but as mentioned earlier, markets are not hearing any of it. Traders are convinced that the central bank will eventually pivot in Q1 next year and at least tee up a rate cut as early as April (or even March perhaps).
This article was written by Justin Low at www.forexlive.com. Source