European Central Bank meeting today – preview – hurdle for a rate hike is high

The European Central Bank policy decision is due Thursday, 26 October 2023:

  • 1215 GMT
  • 0815 US Eastern time

European Central Bank President Lagarde’s news conference follows a hal hour later (1245 & 0845)

Preview comment via ANZ:

  • Core inflation has improved significantly in recent months. Yet the ECB remains guarded given vagaries in the oil price and the possibility higher energy costs could cause a re-acceleration in headline inflation.
  • We think the bar for another ECB rate hike is high.
  • Outside of energy uncertainty, evidence from the monetary aggregates, real economic data and wage growth support an improvement in underlying inflation trends.
  • Based on our assessment of the data, we think it is appropriate for the ECB to pause rate hikes. In addition, some leading hawks have suggested rates may now be appropriately restrictive.

Commonwealth Bank of Australia:

  • we expect no change in interest rates
  • At the last meeting, ECB President Lagarde flagged the hike was expected to be the last in the cycle and headline and core inflation have since eased.

National Australia Bank:

  • We expect no change to rates (like the consensus) and see the current 4% Deposit Rate as having peaked. That would be in line with the ECB’s caveated message from its last meeting on 14 September that rates have reached levels that, ‘if maintained for a sufficiently long duration, will make a substantial contribution to returning inflation to target.’
  • Although discussions about ending the reinvestment of Pandemic Emergency Purchase Program (PEPP) may take place, any decision is not likely till early 2024

This article was written by Eamonn Sheridan at Source