ECB Meeting Accounts: Was judged that the PEPP could be expected to end in March 2022

According to the accounts of the October European Central Bank monetary policy meeting, the view was held that, judging on the basis of the current developments, net purchases under the Pandemic Emergency Purchase Programme could be expected to come to an end by March 2022, according to Reuters. 

Additional Takeaways: 

"At the current juncture, the accommodative monetary policy stance had to be reconfirmed."

"Monetary policy had to be patient."

"The view was held that judging on the basis of the current developments, net purchases under the PEPP could be expected to come to an end by March 2022."

"It was highlighted that monetary policy decisions needed to be data-driven and all incoming data during the coming months needed to be taken into account."

"It was conjectured that there had been no fundamental changes in the underlying causes of the low growth and low inflation environment."

"It was cautioned that the data available in December would not resolve all the uncertainties around the medium-term inflation outlook."

"It was seen as important that the governing council should keep sufficient optionality to allow for future monetary policy actions, including beyond its December meeting."

"The remark was made that, at some point in the future, the very generous monetary policy support to the economy would need to be reassessed."

"It was deemed important for the governing council to avoid an overreaction as well as unwarranted inaction, and to keep sufficient optionality in calibrating its monetary policy measures to address all inflation scenarios that might unfold."

"Concerns were voiced that expectations regarding the future path of short-term money market interest rates."

"The uncertainty around the medium-term prospects was seen as elevated."

"By explicitly stressing the need for the durability of the underlying inflation developments, the governing council’s forward guidance was particularly well suited to looking through “cost-push”."

"Members agreed that price pressures were more persistent than had been foreseen in the September ECB staff projections."

"It was judged that second-round effects were not visible so far."

“It was pointed out that this was only a gradual move towards levels more in line with the new inflation target and that such re-anchoring should not be confused with an unanchoring on the upside.”

“Doubts were expressed about the use of typically downward-sloping oil price futures curves as projection assumptions when fossil fuel prices were bound to remain elevated or rise further.”

“Members widely agreed on the expected hump-shaped pattern in the shorter-term inflation outlook.”

“It was argued that price effects could be greater than currently estimated if labour force participation did not return to pre-crisis levels.”

“Likely that in the December 2021 Eurosystem staff projections the shorter-term inflation outlook for the euro area would once again be revised upwards.”

“Against this background, it was seen as likely that in the December 2021 Eurosystem staff projections the shorter-term inflation outlook for the euro area would once again be revised upwards.”

“Members discussed the notion of “stagflation” in relation to risks to the economic outlook.”

“It was recalled that stagflation experienced in the 1970s occurred in a different environment.”

Market Reaction

The euro has not seen any sustained reaction to the latest minutes.