PGIM Fixed Icome: Commentary on ECB decision
PGIM Fixed Icome: Commentary on ECB decision
Katharine Neiss, Chief European Economist at PGIM FIxed Income, comments on the recent ECB decision:
The ECB’s latest interest rate decision and confirmation of faster balance sheet run off are in line with expectations.
That said, updated staff projections and language in the policy statement suggest a notably more hawkish outlook for the policy outlook than expected. Yes, staff projections for GDP growth have been revised down, but just a touch considering the weaker data flow.
More importantly, the outlook for inflation has been revised up in every year, including 2025 which the ECB now sees at 2.2%, so above the ECB target.
All of this suggests the ECB is headed to taking rates closer to 4% against a backdrop of already weakening consumption, which remains below its pre-pandemic level. For now though, it looks like the key variable for the ECB is real time inflation data.
Share this post!
Related posts
-
Read more about "ECB will increase its focus on green transition"ECB will increase its focus on green transition
-
Read more about "Joeri de Wilde: Sluggish ECB slows down energy transition"Joeri de Wilde: Sluggish ECB slows down energy transition
-
Read more about "Invesco: ECB is nearing the end of its tightening cycle"Invesco: ECB is nearing the end of its tightening cycle
-
Read more about "Van Lanschot Kempen: ECB might be done for the cycle"Van Lanschot Kempen: ECB might be done for the cycle
-
Read more about "PGIM Fixed Income: Euro area interest rates appear to have peaked"PGIM Fixed Income: Euro area interest rates appear to have peaked
-
Read more about "abrdn: Signals ECB to end current raising cycle"abrdn: Signals ECB to end current raising cycle
-
Read more about "Columbia Threadneedle: Monetary policy ECB is biting"Columbia Threadneedle: Monetary policy ECB is biting
-
Read more about "DWS: Interest rates expected to rise further in September"DWS: Interest rates expected to rise further in September