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ECB Stays (Relatively) Gloomy
- Surprising hardly anyone, the ECB continued to state that the bond purchase program would continue to run until a sustained pick-up in inflation is discernible and that policy rates would stay as low (if not lower) for even longer.
- Markets should be as watchful to see why the ECB assessment of the economy was hardly upgraded, now suggesting merely that some further firming in growth from the pick-up that likely occurred in the last quarter. Indeed, citing global uncertainties, the ECB statement still pointed to growth risks tilted to the downside.
- There are two key themes that the ECB should be more willing to acknowledge but may be unwilling to do so at the current juncture. Firstly, price pressures are emerging, both from the demand and the supply side. Secondly, the current backdrop clearly sees robust Eurozone consumer and business survey dat.
- Markets thinking may shift increasingly to enquiries this around why the ECB is not considering such a policy shift, aware very much the slow reaction function the ECB overall has to changing circumstances!