Carsten Brzeski, chief economist at ING, notes that the latest ECB minutes of the December meeting try to paint a picture of an ECB in cosy togetherness, having come to terms with past disagreements and wait-and-see seems to be the preferred option for 2020.

Key Quotes

“The December meeting was a confirmation of the status quo and did not hint at any upcoming policy changes. The just-released minutes do the same.”

“Here are the most important takeaways from the minutes:

  • At the December press conference, Lagarde had already communicated subtle changes to the ECB’s macro-economic assessment. These changes were also reflected in the minutes.
  • As regards inflation, the ECB acknowledged “some indications of a mild increase” in measures of underlying inflation. Interestingly, the minutes explicitly mention the fact that housing-related costs are not sufficiently incorporated in the current HICP measure, an issue which will definitely be pursued in the strategy review.
  • Regarding the current monetary policy stance, the minutes show broad agreement to stick to the current position, a reconfirmation of the September decision. This view is nicely formulated in the minutes with:
  • "The present monetary policy stimulus appeared fully appropriate, lending substantial support to growth and inflation developments. While vigilance on the efficacy of the policy measures and the appropriateness of the monetary policy stance was called for, it was highlighted that the measures should be given time to exert their full impact on the euro area economy."
  • The only caveat to the current stance was made in the reference to possible side effects of the present measures.
  • Maybe a bit of a disappointment for market participants, but according to the minutes the ECB did not discuss any details of the upcoming strategy review. So, we will never know whether Christine Lagarde’s comments on the review, leaving no stone unturned, during the press conference was her personal view or that of the ECB’s Governing Council.”

“The minutes of the ECB December meeting suggest that the central bank has returned to harmony or, at least, is trying to keep controversies behind closed doors. Looking forward, the strategy review could be the most excitement we will get from the ECB this year. It increasingly looks as if the ECB will stay on hold throughout the entire year.”



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