- But in abnormal times, it does not necessarily mean an end to the journey
- Will monitor closely possible spillovers of energy prices
- Have to react to dynamics that risk pushing inflation off target
- Inflation expectations do not so far reflect a risk of lasting spillover
- 10% appreciation in the euro would compensate inflation impact of €10 increase in oil price
- We need to remain alert and agile in all our next meetings
- Barring any major exogenous shock, next monetary policy move leans in the direction of accommodation
As they look to pause through the summer, they will just allude to whatever reasons they can find at this point in time. Sure, there are risks from trade and geopolitical tensions. But the latter will surely pass in due time, so it should not be an issue for the ECB in the big picture.
This article was written by Justin Low at www.forexlive.com.