ECB to look through current inflation surge, stick with easy policy - HSBC

ECB to bolster support for more QE next month, says HSBC

The firm argues that the surge in inflation pressures in the euro area isn't going to deter the ECB from sticking with its easy stance, despite estimates of annual inflation hitting an all-time high of 4.5% in November, according to HSBC's senior economist.

In a note to clients, the firm says that:

"The high November inflation print may make it harder for ECB president Lagarde to maintain the 'transitory inflation' line. But we still expect the ECB to 'look through' the current inflation surge and announce further QE support for 2022 in December."

As for the year ahead, the firms sees inflation falling to 1.4% late in 2022 as they argue that "November should mark the peak for both headline and core inflation" with "futures prices point to a significant moderation in gas and electricity prices after spring".