ECB officials said underlying price trends look more benign than the headline, even as September meeting accounts showed agreement that inflation risks are skewed higher. A Reuters poll sees no move this month.
European Central Bank policymakers dampened bets on a near-term rate rise on Thursday, even as they said inflation could exceed already high projections, Reuters reported. The bank has raised rates twice this summer. Markets have been pricing two or three further moves as inflation sits near twice the 2 percent target.
Chief economist Philip Lane, speaking in London, said fiscal support that has propped up growth this year is likely to fade in 2027, which would cool both expansion and inflation. Other officials pointed to more benign underlying price trends and said they were not rushing to hike again.
Accounts of the 9-10 September meeting, released Thursday, showed all policymakers agreed inflation risks are skewed higher because of energy volatility and wider uncertainty. Reuters said the comments still fit a poll of 73 economists in which nearly all expect the ECB to hold this month and most expect a move only in December.
Policymaker Dolenc said persistently elevated inflation in the September projection, and unresolved conflicts in the Middle East, Ukraine and elsewhere, support moving rates toward more restrictive territory. That is one policymaker's case, not a decision.
No rate was changed on Thursday. The next policy meeting is separate from the accounts release.
People Sentiments Mixed
- Philip Lane said fiscal support is likely to fade in 2027.
- Dolenc said elevated inflation supports a more restrictive stance.