A placeholder meeting for December?


Well, for the most part perhaps. No changes to policy is expected as the ECB continues to slowly wind down PEPP by March next year. I'd still argue that they will keep that timeline in place just to be safe rather than sorry.

But how that plays into the reality of more persistent inflation and slowing growth conditions, seems to be a bet that policymakers are willing to take as they will bite the bullet and stick with the 'transitory' narrative.

Any decision on how to carry forward PEPP flexibility is still up for debate so don't expect any immediate decisions today. December is the likely time to be hearing anything more concrete with the likelihood that the ECB will increase APP purchases, as one would expect.

So, what else is there to today's meeting/announcement?

It's all about the language for the most part. In that regard, I don't see much to change from the statement given that they will be kicking the can to December.

As such, watch out for Lagarde's press conference and mentions on inflation and the economy. I'd expect Lagarde to acknowledge the risks associated on both fronts but still maintain the existing stance that inflation pressures - or at least the factors driving it - are temporary in nature, though any footing is likely to be less firm than in the summer.

I'd also expect Lagarde to outline downside risks to the September forecasts, which will likely be revised lower amid the ongoing worries on inflation and supply bottlenecks.

An interesting spot to watch will be how much she wants to push back on market pricing on any rate hikes by the ECB. We have heard several policymakers come out to reiterate that market expectations are not in line with the ECB's forward guidance and it'll be interesting to see how much Lagarde wants to emphasise or push back on this matter.