ECB Lane
ECBs Lane is speaking and says:
- it is essential to a void that a spell of temporarily high inflation pressures – even if arising from a supply shock – becomes entrenched.
- Downward nominal rigidities in wages and prices means that surprises and relative price movements should mainly be accommodated by tolerating a temporary increase in the inflation rate
- in the event of an adverse supply shock, the horizon over which inflation returns to the target level could be lengthened in order to avoid pronounced falls in economic activity and employment
- especially difficult to interpret standard indicators of underlying inflation
- so long as longer term inflation expectations are anchored at the target level, inflation will be at the target level if economic activity and employment are at their potential levels.
- Tightening policy in response to temporarily high inflation would be counterproductive.
- Excessive delay in monetary tightening runs the risk of a sharper subsequent height in interest rates and a greater loss in output.
- If current inflation is above the target level but the forecasts show it is falling below target over the projection horizon, tightening would be counterproductive
The EURUSD moved down to test the European session low at 1.1058 and bounced. The pair currently trades at 1.1086. The swing lows from January and February between 1.1106 and 1.11207 remain targets on the topside that need to be broken if the buyers are to take more control. Those levels are the minimum. The London session high reached just below that level at 1.11187.
EURUSD bounces off the earlier lows
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