Central Bank Monitor
Summary
The STIR market and the majority of economists expect the ECB to hold the policy rate at 2%.
ECB likely to reiterate that policy is in a “good place” and remain data dependent.
The Euro area data have been notably firmer than anticipated in the September ECB staff projections:
Real GDP growth is tracking a cumulative 0.4% stronger for H2
Q3 wage growth was 0.8pp higher than anticipated and inflation is tracking 0.2pp firmer in Q4.
German fiscal stimulus to provide a tailwind, though.
This could lead to an upward revision to the outlook. Dovish risks:
Implied future rate path too high
Exports are sluggish, though, due to tariffs and a stronger Euro.
More Chinese imports are weighing on prices
Higher EURUSD on the back of a more dovish Fed
Sharp drop in oil prices
Hawkish risks:
Ukraine peace deal and more spending on reconstruction
Sticky wage inflation