ECB minutes: The bottom line is…but… – ING

By FXStreet Peter Vanden Houte, analysts at FXStreet explained that while the minutes of the ECB’s January monetary policy meeting didn’t contain strong surprises, they clearly seem to indicate the willingness to act in March.

Key Quotes:

“Indeed, on the back of the developments in China and the emerging world, as well as volatility in financial and commodity markets, the Governing Council saw risks to the downside regarding the economic recovery. In the same vein, inflation risks were also tilted to the downside.

More specifically, the fear of second-round effects in the wake of a continuous undershooting HICP inflation, seems to have become more prominent, with some concerns expressed that recent wage dynamics could already point to incipient second-round effects. Interestingly, on inflation, there was also some discussion that after a prolonged period of undershooting the Governing Council would have to consider a limited period of inflation overshooting in the future, which would suggest monetary policy remaining easy even longer than currently expected.

The bottom line is that the ECB looks ready to act again in March. Since the January meeting the economic environment has deteriorated and financial stress has barely softened. That said, it is far from clear what the ECB could still do as …read more

Source:: FX Street