ECB Sticks To The Script - Minutes: Economy Showing Resilience

Published date: 11/10/2018

No change to the EUR in the wake of the release of the ECB minutes of its last meeting. The governing council discussed the resilience of the economy, mitigating downside risks though are mindful of the fact the trade tensions will continue to weigh on confidence.  

Members did however also remark that factors behind the growth slowdown may not be transitory, so there are concerns over the slow down in activity in recent months. 

Against that, the council see domestic price pressure strengthening and broadening, and this was evidenced in the PPI figures released last week.  Naturally, the ECB's mandate is price stability, so with inflation up at 2.0%, they are on the lookout for a material pick up, though as mentioned before core rates (which relate to demand-led inflation) are still relatively weak.  

All in all, there is little here to suggest the central bank is set to change their forecasts on when they see it as fit to start normalising rates.  As it stands, rates will stay where they are through the summer of 2019, after which time they are expected to start tightening - albeit very gradually.  

No reaction seen on any of the EUR pairs, nor should there be.  EUR/USD is pushing the session highs at the present time - this a function of USD softening more than anything else, though we have also seen EUR/GBP finding buyers ahead of 0.8700 so this can have a notable impact on the EUR spot rate at times.  

EUR/CHF is sticking to a tight range above 1.1400, and along with EUR/JPY, is on the defensive given the stock market volatility which can affect the JPY and CHF on a broader basis.  


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