|

ECB Accounts: Number of members would not have opposed raising rates

The accounts of the European Central Bank's April policy meeting showed on Thursday that policymakers acknowledged that upside risks to inflation and downside risks to growth have intensified.

Key takeaways

"Weakness could persist well beyond the end of the conflict."

"There was little evidence that the increase in energy prices was generating second-round effects."

"On the consumer side too, it was still too early for second-round effects to be visible, since for this wage negotiations needed to take place."

"Current situation of a classical negative supply shock was different from the situation in 2022."

"It was now evident that the energy price shock was not only large, but also becoming more persistent, raising the risk of it feeding through into broader inflation dynamics."

"By June, more information on the impact of the energy shock would be available."

"A number of members would not have opposed raising rates."

"Increasingly unlikely that a looking through approach without any monetary policy action would be appropriate."

"A number of members noted that the decision was a close call."

"It was argued risks of unanchoring had re-emerged."

"The view was broadly shared that there was no evidence yet of strong second-round effects."

"If a conclusive agreement was reached to end the war, one could not quick reversal in the risks to inflation."

Market reaction

EUR/USD showed no immediate reaction to the ECB Accounts and was last seen trading slightly above 1.1600, losing 0.12% on the day.

Author

Eren Sengezer

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

More from Eren Sengezer
Share:

Editor's Picks

GBP/USD surrenders some gains, back to 1.3420

GBP/USD holds on to moderate gains above 1.3400 the figure on Friday. Optimism surrounding the UK government’s leadership transition and expectations of further BoE tightening support the British Pound, while easing tensions in the Middle East and fading Fed rate-hike expectations weigh on the US Dollar.

EUR/USD turns positive, targets 1.1450

EUR/USD now picks up pace and advances toward the 1.1440 region on Friday, up modestly for the day. With no major economic data due, lingering uncertainty over the US-Iran conflict keeps investors cautious, limiting the pair's upside.

Gold remains offered, still below $4,100

Gold struggles to extend Thursday’s rebound and navigates below the $4,100 mark per troy ounce on Friday. Uncertainty surrounding the Middle East conflict limits the precious metal’s upside, which is also under pressure amid rising US Treasury yields across the curve.

Week ahead – US CPI and Warsh testimony to take centre stage, BoC eyed too

US inflation report and Warsh testimony to headline the week. Dollar to dominate amid slew of other US data and Mideast tensions. Amid fresh Iran escalation, China GDP to shed light on Q2 impact. Bank of Canada not expected to follow RBNZ with rate hike.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June FOMC meeting landed mid-round-trip, describing a world that had already stopped existing.