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EMU CommentMinutes with a hawkish touch

  1. ECB communication could be revisited in early 2018
  2. ECB to tread carefully, but turn more hawkish
ECB communication could be revisited in early 2018
Normally, the minutes of the ECB policy meetings do not get a lot of attention and merely reflect the key points already known from the policy meeting. This was basically also the case for today’s release of the December minutes. However, it had a hawkish touch, or at least markets seemed ready (these days) to interpret it that way. The ECB revealed a "widely-shared view among members of the governing council that communication would need to evolve gradually, without a change in sequencing, if the economy continues to expand and inflation converges further towards the governing council's aim". Both of these conditions seem to have been fulfilled in the ECB's own view (rising inflation is still questionable, though). Draghi did admit at the policy meeting that guidance on rates will gain importance, but today's minutes revealed that the ECB members agreed that forward guidance could be revisited as soon as early 2018. That said, the ECB's own outlined policy path during 2018 does call for significant change in guidance during 2018, but perhaps not as early as the minutes could suggest.
ECB to tread carefully, but turn more hawkish
The minutes did again stress the importance of a steady hand in communication, so as not to trigger an unwarranted tightening of financial conditions, which underlines the fact that we should probably not expect significant changes to forward guidance already at the January policy meeting. However, the minutes do support our previously-stated view that the ECB might well turn more hawkish this year than widely expected. Furthermore, a remark in the minutes was made that a gap seems to be emerging between favourable economic conditions and a policy stance that remained in crisis configuration. This is also in line with our view.


Rasmus Gudum-Sessingø

Senior Economist


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