What will be the effects of the latest moves by the ECB
What the ECB has announced. The comment by Antonio Cesarano, Intermonte's chief global strategist
In today's meeting, the indications present up to now were confirmed, above all on the accelerated pace of purchases of the Pepp pandemic plan , also extended to the third quarter compared to the pace of the first months of the year.
On this point the decision was not unanimous but by a majority.
In terms of growth and inflation estimates, a general upward revision especially for 2021, but also for 2022. Lagarde justified the fact that the estimates have not been revised also for 2023 especially for inflation, as some impacts they are linked to a comparison effect / bottlenecks, which are gradually destined to disappear.
On the topic of discussion about the Pepp interruption, Lagarde said the argument is premature.
IN SUMMARY
The ECB takes time and postpones the most important decisions probably to the meeting on 9 September, when the estimates on inflation and GDP will be updated and, perhaps, the strategic review will have been completed. On this point, Lagarde reaffirmed her commitment to complete the work during the second half of the year;
On the discussion relating to the issue of the transitory or non-transitory effect of inflation, Lagarde reiterated the transitory impact. However, from the marked revision of the 2021 estimates it emerges that the transitional impact must be understood in the sense of a few quarters. As can be seen from the following table, based on our estimates in line with the average of 1.9% declared today by the ECB, in the coming months inflation could stand well above 2%.
In operational terms, today we had confirmation that the ECB will also be well present during the summer. Looking ahead, the September decision will also depend on the impact that inflation will have on real consumption.
If the impact is significant, it can be assumed that ECB support will continue after September, if anything in a recalibrated and more TLTRO-focused form.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/tutti-gli-effetti-delle-ultime-mosse-della-bce/ on Thu, 10 Jun 2021 14:56:22 +0000.