Highlights
The Governing Council decision to cut the deposit rate by 25 basis points to 3.50 percent from 3.75 percent was to offer greater protection against downside risks, including the risks associated with an excessively slow unwinding of the rate tightening cycle.
The council estimated that inflation could turn out higher than anticipated if wages or profits increased by more than expected.
The latest ECB staff projections confirmed the inflation outlook from the June projections. Inflation was expected to rise again in the latter part of this year and then expected to decline towards the target over the second half of next year, with the disinflation process supported by receding labour cost pressures and the past monetary policy tightening gradually feeding through to consumer prices.
Mostly, members agreed that recent economic developments had confirmed the baseline outlook. This was reflected in the unchanged staff projections for headline inflation and indicated that disinflation was progressing well and becoming more robust.
Generally, members agreed that policy transmission from earlier tightening continued to dampen economic activity, even if it had likely passed its peak. Financing conditions remained restrictive and were reflected in weak credit dynamics, which had dampened consumption and investment.
Looking ahead, it was agreed that policy should continue to follow a data-dependent and meeting-by-meeting approach meaning that there should be no pre-commitment to a particular rate path.
The council estimated that inflation could turn out higher than anticipated if wages or profits increased by more than expected.
The latest ECB staff projections confirmed the inflation outlook from the June projections. Inflation was expected to rise again in the latter part of this year and then expected to decline towards the target over the second half of next year, with the disinflation process supported by receding labour cost pressures and the past monetary policy tightening gradually feeding through to consumer prices.
Mostly, members agreed that recent economic developments had confirmed the baseline outlook. This was reflected in the unchanged staff projections for headline inflation and indicated that disinflation was progressing well and becoming more robust.
Generally, members agreed that policy transmission from earlier tightening continued to dampen economic activity, even if it had likely passed its peak. Financing conditions remained restrictive and were reflected in weak credit dynamics, which had dampened consumption and investment.
Looking ahead, it was agreed that policy should continue to follow a data-dependent and meeting-by-meeting approach meaning that there should be no pre-commitment to a particular rate path.
Definition
The European Central Bank (ECB) meets about every six weeks to determine the appropriate stance of monetary policy. The precise details of the policy deliberations are kept secret for thirty years but, since the 22nd January 2015 meeting, summary version of the minutes have been made available around four weeks after the discussions have taken place.
Description
The minutes provide a key insight into what the ECB is focusing upon when setting policy. As such they potentially can have a sizeable impact upon investor sentiment; especially at times when speculation is rife about a possible near-term change in official interest rates and/or non-conventional monetary policy instruments.
