ECB minutes highlighted stronger growth - ANZ

ECB minutes highlighted stronger growth but also noted that policy will need to remain expansionary for underlying inflation pressures to converge on 2% and as a result there were few surprises on that front, explains the research team at ANZ.

Key Quotes

“Of note was a discussion on the Philips curve, which has flattened, though the ECB believes the relationship is still intact. However, “patience, persistence and prudence” were needed. That means getting inflation up is still contingent on a “very substantial degree of monetary accommodation”. The Governing Council also acknowledged the strength of the euro, “Regarding exchange rates, while it was remarked that the appreciation of the euro to date could be seen in part as reflecting changes in relative fundamentals in the euro area vis-à-vis the rest of the world, concerns were expressed about the risk of the exchange rate overshooting in the future”. That prompted some selling pressure on the euro, but it abated as the session wore on.”