Sumary of ECB Preview: The First Meeting After The New Inflation Policy:
- Submitted by NewSquawkECB policy announcement due Thursday 22nd July;
- The review has led the ECB to adopt a new symmetrical inflation target around 2%;
- Such a move could lean back on the perception that the review is merely a formalization of the approach the Bank was already taking.
- The bulk of the press conference (in its new format) will focus on the findings of the strategic review whilst outlining policymakers’ perceptions of the Eurozone recovery and impact from the spread of the Delta variant ahead of a more comprehensive assessment in September.
- Meanwhile, the ECB’s macro projections saw little changes to growth forecasts, whilst 2021 inflation was revised higher to 1.5% from 1.0% amid transitory factors, and headline HICP is seen cooling to 1.4% by 2023, and therefore short of the ECB’s target.
- That said, much of this has already been labelled as a transitory phenomenon by the Bank with policymakers more concerned about the medium-term inflation outlook.
- STRATEGY REVIEW: The ECB’s much-awaited strategic review confirmed reports prior to the release by unveiling a shift away from its “close to, but below 2%” medium-term inflation target.
- Instead, policymakers will now opt for a “symmetric 2% target” whereby “negative and positive deviations of inflation from the target are equally undesirable”.