ECB's Lane: We will be considering at every meeting what the scenario is

We will be considering at every meeting what the scenario isDrop in consumer confidence was quite bigYou can see downturn in PMIsInflation expectations show significant effect for first year, then smallerThe market dynamic suggests a price-level jumpUnderstanding selling price expectations will be importantWage tracker is a good leading indicator for negotiated wagesECB’s Chief Economist Philip Lane is emphasizing that the Governing Council will evaluate the specific economic scenario at every upcoming meeting. This data-dependent approach comes at a critical moment as the Eurozone economy is hit by a mix of cooling demand and increased price pressures. Recent indicators have provided a sobering view of the current environment, most notably a significant drop in consumer confidence. This decline suggests that households are becoming increasingly cautious, potentially pulling back on spending.The loss of momentum is further evidenced by a visible downturn in PMIs yesterday. These forward-looking surveys of business activity point to a cooling in both the manufacturing and services sectors, marking a shift from the more resilient performance seen in previous quarters. This softening in the real economy is a key factor in the ECB’s meeting-by-meeting assessment.On the inflation front, current expectations show a significant effect for the first year, as immediate price pressures continue to filter through the economy. However, these expectations are notably smaller for the subsequent period as markets expect the slowdown in growth (or rate hikes) to eventually put downward pressure on inflation.
This article was written by Giuseppe Dellamotta at investinglive.com.

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