Economics & Growth | Monetary Policy & Inflation | UK
ECB Monitor – September Decision in the Balance
- By Henry Occleston
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- 6 min read
Summary
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- The market has come around to pricing a September pause, supported by media reports of momentum growing among policymakers for that.
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- We would caution against reading too much from this alone – data is far from dovish, and this week’s inflation release will be key.
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- Updated forecasts will be an important decider of the action taken – the ECB may have a hard time skewing these more dovish.
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- President Lagarde’s speech at Jackson Hole was hawkish in the long-term, but is unlikely to reflect her views for the September meeting. It supports our belief that rates will need to remain elevated for some time.
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- August core inflation will prove important. The market is expecting +5.3% YoY but there is little consensus on that. 5.2-5.3% would align with our expectation that August saw less repricing than July, but this will pick up again in September.
-
- The details will be key. A drop in YoY does not mean a lot given base-effects – focus on the MoM momentum.
Summary
-
- The market has come around to pricing a September pause, supported by media reports of momentum growing among policymakers for that.
-
- We would caution against reading too much from this alone – data is far from dovish, and this week’s inflation release will be key.
-
- Updated forecasts will be an important decider of the action taken – the ECB may have a hard time skewing these more dovish.
-
- President Lagarde’s speech at Jackson Hole was hawkish in the long-term, but is unlikely to reflect her views for the September meeting. It supports our belief that rates will need to remain elevated for some time.
-
- August core inflation will prove important. The market is expecting +5.3% YoY but there is little consensus on that. 5.2-5.3% would align with our expectation that August saw less repricing than July, but this will pick up again in September.
-
- The details will be key. A drop in YoY does not mean a lot given base-effects – focus on the MoM momentum.
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