Analysts from Rabobank expect no surprises from the European Central Bank at its February meeting. They expect 2022 to bring a reversal of pandemic policies, but not a broader tightening of policy.
Key Quotes:
“The ECB has recovered some policy flexibility in December, but this comes at the cost of some uncertainty and continued market speculation that the ECB will hike rates sooner rather than later. We expect the ECB to stick to its script of transitory inflation, which means that 2022 should only see a reversal of pandemic-related tools, and not a broader withdrawal of monetary accommodation aimed at achieving the inflation goal.”
“While the outlook remains very fluid, we therefore believe that it takes a lot of stars to align before the ECB’s baseline is realised, let alone exceeded, in terms of wage-driven inflationary pressures. And downside risks remain abundant. Most notably, we believe that cost-push inflation could still have a detrimental impact on future consumption and hence medium-term inflation. And the geopolitical environment may further exacerbate the energy price shock, if tensions with Russia escalate.”
“Inflation is still more likely to nip demand in the bud before wage growth gets enough room to accelerate sharply. We therefore maintain our call that 2022 will only see the reversal of pandemic-specific stimulus measures and we do not expect the ECB to turn into a more general inflation hawk.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
![EUR/USD stabilizes near 1.0800 as trading action turns subdued](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/EURUSD/money-9377516_XtraSmall.jpg)
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
![GBP/USD extends sideways grind above 1.2600](https://editorial.fxstreet.com/images/Markets/Currencies/Majors/GBPUSD/new-style-twenty-pound-notes-3079195_XtraSmall.jpg)
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
![Gold pulls away from daily highs, holds above $2,200](https://editorial.fxstreet.com/images/Markets/Commodities/Metals/Gold/safe-investment-gm147311616-17537479_XtraSmall.jpg)
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
![XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC](https://editorial.fxstreet.com/images/Markets/Currencies/Cryptocurrencies/Coins/Ripple/ripple_XtraSmall.jpg)
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
![Portfolio rebalancing and reflation trades emerge into Q2](https://editorial.fxstreet.com/images/TechnicalAnalysis/ChartPatterns/PointFigure/hand-pointing-graph-elements-of-this-image-furnished-by-nasa-76654497_XtraSmall.jpg)
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.