The Governing Council of the European Central Bank (ECB) has expressed concern about the risks related to the evolution of the euro exchange rate, which could have a negative impact on the inflation outlookminutes from the ECB’s December monetary policy meeting showed on Thursday.
Additional comments summarized by Reuters:
“It was observed that December inflation projections for Eurogroup staff were well below target of inflation of the council of government “.
“The Pandemic Emergency Purchase Program (PEPP) is more efficient than a rate cut in current pandemic conditions characterized by high uncertainty “.
“The benefits of the PEPP purchases outweighed the potential costs.”
“It was argued that one might expect a further reduction in yields from their already highly accommodative levels would only have marginal effects on growth and inflation“.
“Maintain favorable financing conditions in such an environment it could even accelerate the dynamics of recovery. “
“Usually, It was considered that an adequate and proportional response to the prevailing type of blow is to increase the horizon of net purchases under the PEPP“.
“Several members called for a more moderate increase in the PEPP endowment.”
“There were also some arguments in favor of a greater ease”
“It was argued that the approach to preserve favorable financing conditions implied a departure from the constant monthly rhythm of purchases.”
“There is no clear evidence, at least so far, that investors have perceived negative effects on competitiveness to significantly offset the positive effects of global demand implied by a weaker US dollar.”