Goldman Sachs: ECB Chatter
Resilient growth meets tighter financial conditions. Most ECB officials—including Bundesbank President Nagel and Bank of Latvia Governor Kazaks—reiterated that the economy had so far proved more resilient than expected. At the same time, some policymakers—including Banque de France Governor Moulin and Bank of Finland Governor Rehn— suggested that the increasing in long-term interest rates and resulting tightening financial conditions would likely slow down growth. Inflation too high, but still no signs of second-round effects. Governing Council members concurred that inflation remained "too high" and "well above” target, as stated by National Bank of Belgium Governor Wunsch and Bank of Greece Governor Stournaras. That said, several officials—such as ECB President Lagarde and Bank of Ireland Governor Makhlouf—also emphasised that there were still no signs of second-round effects in wage growth of inflation expectations. On hold in October, a measured approach remains appropriate. No policymakers advocated for a hike in October. Most officials instead maintained a balanced tone, guiding for further tightening on the one hand, but emphasising the ECB’s measured approach on the other.
Resilient growth meets tighter financial conditions. Most ECB officials—including Bundesbank President Nagel and Bank of Latvia Governor Kazaks—reiterated that the economy had so far proved more resilient than expected. At the same time, some policymakers—including Banque de France Governor Moulin and Bank of Finland Governor Rehn— suggested that the increasing in long-term interest rates and resulting tightening financial conditions would likely slow down growth. Inflation too high, but still no signs of second-round effects.
Governing Council members concurred that inflation remained "too high" and "well above” target, as stated by National Bank of Belgium Governor Wunsch and Bank of Greece Governor Stournaras. That said, several officials—such as ECB President Lagarde and Bank of Ireland Governor Makhlouf—also emphasised that there were still no signs of second-round effects in wage growth of inflation expectations. On hold in October, a measured approach remains appropriate. No policymakers advocated for a hike in October.
Most officials instead maintained a balanced tone, guiding for further tightening on the one hand, but emphasising the ECB’s measured approach on the other. A few members—including Bank of Slovenia Governor Dolenc and Banque de France Governor Moulin—also suggested that the tightening in financial conditions could substitute for some rate hikes.