ECB minutes give members little room for improvement until the Dec meeting
I've been going through the minutes and while most of it is pretty much the same as the ECB statement at the time, the parts on the current monetary policy stance and what's being considered is very telling
Here's the key points;
"It was recalled that, at its previous monetary policy meeting, the Governing Council had felt that it was premature to conclude whether adverse external developments and increased downside risks would have a transitory or lasting impact on the euro area price outlook"
"On the basis of the economic and monetary analyses of incoming data, a range of arguments were offered as to whether it could already be concluded that there was a material change in the outlook that warranted a policy response or if further evidence and analysis were needed, particularly in the context of the December Eurosystem staff projections."
"Against this background, members voiced concern about the prospect of a further deterioration in the price outlook, including at the policy-relevant medium-term horizon, with risks clearly on the downside. Attention was drawn, in particular, to the loss of momentum in the turnaround of various indicators of underlying inflation"
The fears of the ECB are laid on the table here and they make the case why further action is needed;
"Against this background, the view was put forward that a case could be made for considering reinforcing the ECB's accommodative monetary policy stance already at the current meeting and, in any case, to act sooner rather than later."
So what does this mean for December?
Here's the biggest point out the lot;
"It was therefore seen as preferable to wait until December to reassess whether there had been a sufficient change in the factors underlying the medium-term outlook for price stability."
In a nutshell, there is absolutely no way that the data can improve enough in one month to change the inflation picture. We'd need to see core CPI come in near 1.5% and headline above 0.5%, among many other price improvements, to see them holding off, and there's more chance of me becoming next head of the ECB than that happening
Here's some icing on the cake;
"...Another reflection pointed to the need for more forceful action or for considering a broader set of tools to ensure adequate transmission to the real economy and to underpin a firm anchoring of inflation expectations."
Draghi may have already made December a done deal but this looks like the cherry on the top
Draghi ready to bring the big guns out in Dec
