ECB Accounts: Uncertainty surrounding the economic outlook had increased
|The accounts of the European Central Bank's (ECB) October policy meeting revealed on Thursday that members “highlighted that the uncertainty surrounding the economic outlook had increased compared with at the time of the September”.
According to the document members agreed that most indicators of underlying inflation appeared to have passed their peak and continued to decline, but they warned that domestic inflation was stubbornly high and longer-run inflation projections still seemed to be above ECB’s target.
Key takeaways:
Members highlighted that the uncertainty surrounding the economic outlook had increased compared with at the time of the September Governing Council meeting, also affecting the assessment of the appropriate monetary policy stance.
it was maintained that, given the current outlook, it could be expected that the Governing Council would be able to bring inflation back to its 2% target by 2025. Although it was generally assumed that the “last mile” in bringing inflation back to target was the most difficult, it was argued that the Governing Council should be careful that its efforts to tame inflation did not eventually lead to an undershooting of the target.
Members agreed that the Governing Council should continue to stress its determination to set policy rates, through its future decisions, at sufficiently restrictive levels for as long as necessary to bring inflation back to target in a timely manner.
Even if interest rates were left unchanged at the current meeting, the view was held that the Governing Council should be ready, on the basis of an ongoing assessment, for further interest rate hikes if necessary, even if this was not part of the current baseline scenario.
Market reaction
The Euro declined modestly following the release of the accounts. The EUR/USD dropped towards 1.0900, and the EUR/GBP remained under 0.8700.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.