Comments from the ECB chief economist have just been published. Highlights:
- Market-based indicators suggest that inflation will return to levels compatible with our target in the course of 2024
- Three-year-ahead inflation expectations of households have risen above target
- We remain attentive to the spread between different money market rates as well as collateral scarcity concerns
- Evidence overall suggests that further progress in bringing inflation towards our aim can be attained by ensuring the appropriate level of slack in the economy, provided inflation expectations remain sufficiently well-anchored
- ECB model-based decompositions of financial asset price movements across the United States and the euro area point to a prominent role of US monetary policy tightening in driving the increase in euro area yields, the correction in euro area equity markets, and the recent euro depreciation
- ECB staff analysis indicates that a Fed tightening elicits large contractionary effects on real activity and eventually inflation in the euro area.
- Full text
There's no signal on monetary policy here but Lane will be doing a 'fireside chat' at 2 pm ET.
