Home Business The ECB will not follow the Fed and will hold view on transitional inflation (analysts)

The ECB will not follow the Fed and will hold view on transitional inflation (analysts)

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Fed Chairman Jerome Powell said last week that we can no longer talk about transient inflation. Price increases are spreading across several sectors, and producer prices advanced 21.9% year-on-year in October. Also considering the rising import prices (8.2% yoy in September), it is clear that further inflationary pressure is emerging.

Will the ECB also do the same? According to Martin Wolburg, Senior Economist of Generali Investments, the European central bank will remain reluctant to give up the “transitional” label for inflation and in this context the meeting on 16 December will be decisive.

ECB officials continue to identify the current inflation spike as transitory, due to high energy prices and production bottlenecks. Board members note that wage pressures are still contained and inflation expectations remain anchored.

“In conclusion – adds Wolburg – we will see if the ECB will have to update its projections for inflation and what will happen in terms of rates, a rise in which is still unlikely for 2022, but our base scenario of unchanged rates in 2023 is increasingly at risk”.

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