Prior to the release of the Minutes, the market had priced in a 73% probability that the ECB would cut rates by 25 basis points in September. Here are CPI and Core CPI Eurozone inflation projections from ECB Minutes:
- CPI inflation in 2024 seen at 2.5% vs. 2.3% earlier
- CPI Inflation in 2025 seen at 2.2% compared to 2.0% earlier
- CPI Inflation in 2026 unchanged at 1.9%
- Core CPI inflation in 2024 at 2.8% compared to 2.6% earlier
- Core CPI inflation in 2025 at 2.2% compared to 2.1% earlier
Minutes from 5-6 June ECB meeting
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Open account Try demo Download mobile app Download mobile app'Euro area macroeconomic data had continued to turn out better than expected over the past four months, strengthening investors’ view that the economic recovery was on track. By contrast, macroeconomic data surprises in the United States had become less favourable'
- There are concerns of policy unduly restraining growth falling.
- Wages in the Eurozone were still growing strongly
- While the impact of restrictive monetary policy has gradually faded, the services sector has suffered less.
- According to bankers, the labour market remains stable
- New CPI forecasts were based on the assumption that energy and food inflation would fall below long-term averages
- Wages continue to show solid growth momentum throughout
- The Council is divided over the distribution of risks of doing too much/too little on monetary policy
- Many members felt that the data available since the last meeting did not increase their confidence that inflation will approach the 2% level.
- There was a case for keeping interest rates unchanged at the current (5-6 June) ECB meeting
- As a result, more time is still needed to gain greater clarity on the dynamics of important inflation factors.
- There was a case for keeping interest rates unchanged at the current meeting
EURUSD (M1 interval)
The euro gained slightly after the ECB's Minute reading. The magnitude of the move, however, is not very big. Overall, the tone of the minutes seems slightly more hawkish.
Source: xStation5
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