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European Central Bank policymakers expect the central bank to raise its long-term inflation forecast forecast next month as uncertainty continues to rise as to how quickly it should respond to rising prices.
The ECB has been anticipating how eurozone prices will rise this year as the economy recovers due to the coronavirus epidemic. Members of the central bank’s governing body said they expected to see it again in 2022 in December, according to minutes about his October meeting, published Thursday.
But council members acknowledged that there was “uncertainty” about the rise in inflation in 2023 and 2024, which is one of the measures the central bank will use to try to buy bonds and interest next year.
He believes that this means they have to keep “choices” in their future purchases as much as possible, in order to be able to respond if inflation drops below what they want or beyond.
“While the increase in the risk of inflation should be justified, it was seen as necessary for the governing body to avoid excessive and inappropriate action, and to maintain adequate opportunities to streamline its financial procedures to alleviate any problems of inflation. It could be disclosed,” it said.
The fall in Eurozone prices reached 13 4.1 percent in October, above the ECB’s 2 percent target, prompting some to speculate that the ECB will raise prices next year.
But the ECB acknowledged last month that many of the factors driving inflation this year – including rising electricity prices and barriers – could end next year, albeit at a slower rate than previously reported.
“The members were very much in tune with the movement which is expected to be like a hump on short-term ideas,” it said.
The ECB is becoming more and more popular split from other major central banks, such as the US Federal Reserve and the Bank of England, which have responded to the recent rise in inflation by promising to tighten the policy.
The December ECB meeting is eagerly awaited by investors. Many expect the central bank to decide that its € 1.85tn procurement program, which was launched last year to end the epidemic, will stop buying new ones in March 2022.
However, the central bank is expected to expand its long-term procurement program to facilitate the cut-off.
Some members of the Conservative Council say the ECB should be prepared to suspend the purchase of new bonds next year if inflation does not fall below expectations.
However, some have urged patience, saying there have been few signs of increase in pay rises.
Council members concluded last month that they “should be patient because of the high level of uncertainty,” the ECB said. “It was felt that it was important that the governing body should have the opportunity to vote in order to implement the fiscal plan in the future.”
Jacob Nell, Europe’s chief economist at Morgan Stanley, said the shocks, combined with the recently closed risks in several European countries, show that the ECB could choose to “reduce purchases, and save options” in its December. meeting.
Fabio Balboni, an economist at HSBC, said: “Due to the growing divisions in the governing body and the uncertainty over the balance of views on inflation growth it may be difficult for the ECB to commit to long-term support.”
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