Ecb today and it has a boring forecast but all eyes will be focused on the conference. Let's recap the last few months. Note
- increasing inflation rate.
- increasing core consumer prices
- increasing m2 money supply
- increasing producer prices
- slowing services pmi
- modest increase in manufacturing pmi
- slowing construction pmi
- mostly flat business confidence
- decreasing economic sentiment
- consumer sentiment unchanged but still a negative reading
- a sharp increase in consumer spending
It's a mixed bag with some indicators pointing to a slowdown while others showing improvement. A highlight is the inflation rate with modest monthly increases and is sitting dead on the ecb target of 2%. There has been a noted slowdown and this was highlighted in the last meeting with inflation expectations for the months ahead to slow. I think we will see another wait and see event but with highlights of improvement and unchanged forecasts. I can't see there being any scope given the mixed data for changes in forward guidance on bringing forward or extending rate hikes but we might get something new on ending QE sooner. They must be somewhat concerned that they do not have the interest rate tool at a level that gives them scope for the next downturn that is due in the USA in the next 1 to 2 years (end of the business cycle and their longest expansion on record). This to me is the most interesting part because they will need to play catchup else have to resort to other tools if there is a recession in Europe. China have stated they are expecting a slowdown over the next couple of years. Recession tea is definitely brewing.
I will not be touching the rate announcement but will be pulling up statement wording and comparing it with the last as well as the speaches and questions. Hopefully this isn't a no event even though the general expectations are that it will be.
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