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10/7/2021, 1:35 PM (Source: TeleTrader)
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ECB notes 'significant improvement' in inflation outlook

The European Central Bank (ECB) noted in its meeting minutes on Thursday "a significant improvement over the course of the year" in terms of the inflation outlook. Staff inflation projection had been revised up, "pointing to the emergence of upside risks." However, the ECB reiterated the rise is mostly driven by "temporary factors that would fade in the medium term and not call for policy tightening."

The bank confirmed persistently favorable financing conditions and a somewhat improved medium-term outlook for inflation would allow it to "moderately scale down the pace of purchases under the PEPP." However, it also stressed that "the decision constituted a recalibration of the program in response to current conditions and did not imply tapering or an end to asset purchases under the PEPP." The ECB noted the program will remain flexible and able to "react to short-term shocks exerting upward pressure on benchmark interest rates or, likewise, allowing the pace of purchases to be reduced if favorable conditions could be maintained with an even lower pace."

Baha Breaking the News (BBN) / DJ