Q&A time at the ECB presser 25 January 2018

  • Second reason is heightened market sensitiviity to perceived ECB changes in communications
  • Third is use of language in discussing FX developments doesn’t reflect agreed terms of reference (Eh?)
  • Some ECB members were surprised by the reaction to December’s account (on language)
  • We didn’t discuss cutting the link between inflation and QE
  • The only discussion was on the need to have a discussion, which we said will happen in the early part of this year
  • There hasn’t been much of a change since Oct
  • We cannot declare victory yet
  • We see some signs of wage pressures
  • We don’t target exchange rates
  • Issue is whether FX moves have an impact on the path of inflation
  • Too early to assess whether pass-trough has taken place

Green light! Green light! 1.2500

Buy stop triggered 1.2510, half off already 1.2525. Run the rest.

  • We consider nominal wage growth as a very convincing sign of inflation moving to our target
Ryan Littlestone

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