Growth concerns driving the ECB
by AIB Treasury Economic Research Unit
- The ECB policy meeting for October marked a firm shift in the focus of the Governing Council away from inflation towards growth concerns in the Eurozone.
- The policy easing represented the first consecutive rate cuts from the ECB in 13 years and the decision was unanimous.
- On inflation, while the headline rate is now below target at 1.7% in September, this reflects prior weakness in energy prices in the month, which has unwound somewhat in recent weeks.
- Unless incoming data surprise significantly to the upside of expectations, which seems unlikely, the ECB’s data dependent approach will likely see it cut rates again in December by 25bps.
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