ECB minutes were released today at 12:30 pm GMT. Document related to December meeting at which rates were kept unchanged. Members expressed more confidence in achieving the 2% inflation target by 2025, but they also acknowledged that convincing evidence of a sustained turnaround in wages, necessary for this goal, had yet to emerge. While it's too early to be confident that their task has been accomplished, the fall in inflation was seen as encouraging.
Key Points:
- No room for complacency in the ECB's approach.
- Substantial loosening of financial conditions observed.
- Caution due to potential near-term rise in inflation.
- Increased confidence in achieving 2% inflation target by 2025.
- Lack of evidence for a sustained turnaround in wages.
- Encouraging fall in inflation noted.
- All three elements of the reaction function moving in the right direction.
- Some members favor earlier end to full reinvestments.
- Governing Council's data-dependent approach emphasized.
- Staff projections align with reaching inflation target by the second half of 2025.
- Unanimous agreement with Mr. Lane's proposal.
- Need for continued vigilance, patience, and maintenance of a restrictive stance.
- Significant part of rate pass-through still pending.
EURUSD did not make major movements right after the publication of the minutes. However, moments later, the declines began to appear and accelerate. Currently, EURUSD has erased the gains from the first part of the day as euro depreciates.
EURUSD (M5) chart, source: xStation 5