- The disinflation process is well on track
- This decision is an example of data dependence
- Economic activity has come in below what we anticipated
- December will be another opportunity to put the information in our model
- What was debated was 25 basis points, end of story (not 50 bps)
- Decision to cut 25 bps was unanimous
- I didn't open the door to anything
- Probably more downside risks to inflation than upside risks
- We are still looking at a soft landing, we certainly do not see a recession
- We are concerned about growth
- Inflation is definitely on the disinflationary track
- We were all surprised by the acceleration lower in inflation data
- We haven't broken the neck of inflation but we're in that process
Lagarde has mentioned soft PMI survey 4-5 times in a clear indication they're worried about growth.
The euro is selling off during the press conference and I think it's because the ECB is behind the curve. They seem to recognize that growth is disappointing but didn't even consider 50 bps. Rates at 3.25% are too high for an economy that's repeatedly stuck in stagnation and is facing fiscal austerity. Ultimately, being late to cut now will mean they cut more later and the market is sniffing that out.
