On Thursday the ECB will likely only tinker around the edges of their commentary and forward guidance (see red entries in table below) – such a dovish press conference will likely generate a small euro depreciation and fall and €Area yields. Specifically, the ECB will likely: (i) acknowledge the improving growth outlook by moving to … More June ECB Preview: Dovish Tinkering
This piece argues that last week’s susprising-hawkish MPC vote and minutes do not represent a dramatic change in the picture for UK monetary policy. The limits to the MPC approach of looking through temporarily above-target inflation, driven by sterling’s post-referendum depreciation, are further from being reached than the minutes-related headlines suggest. So the limited rebounds … More Fade hawkish MPC minutes: contrary to MPC three judgements plus downside risks to UK consumption & net exports
This piece argues that, despite recent improved €Area inflation and activity data, Draghi is likely to reiterate a highly-acccommodative ECB policy stance at Thursday’s press conference. Contrary to growing market discussions, the ECB is very unlikely to drop it’s forward guidance text on potential further rate cuts as it remains focussed on subdued core inflation … More ECB Preview: subdued wage and core inflation prospects mean it’s too early to tone down forward guidance
Recent Euro area data have been moderately positive, albeit far from stellar: the Citi EA Economic surprises indicator has been broadly flat since mid-May. Probably the nicest recent upside surprise was the bounce in core HICP inflation from 0.8% to 1.0% in the flash July data, the highest since April 2014, beating market expectations of … More Should the ECB be concerned about labour market dynamics and inflation breakevens?