Technical Analysis

ECB’s Panetta: We need to bring inflation back to 2% target as soon as possible

  • Medium-term inflation outlook presents clear upside risks
  • Further policy adjustment is warranted
  • The neutral interest rate provides limited guidance here
  • A bigger-than-expected rate hike may heighten volatility, could be interpreted as signalling a higher terminal rate

Some token remarks for the most part there by Panetta. The ECB’s outlook on rates right now is very much a case of playing things by ear. If economic conditions deteriorate sharply, it is hard to imagine them being too aggressive as we approach the turn of the year.

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