30 June 2004

EZA 620

ECB Council Preview July 2004
RATE MOVE HIGHLY UNLIKELY 1 JULY: PROSPECTS STILL MIXED BUT SLIGHT BIAS (UNSTATED) TOWARDS DISTANT TIGHTENING ECB Executive Board 99% certain to recommend that the ECB Governing Council keep ECB's key interest rates on hold again on Thursday, 1 July Main macro-economic indicators and monetary aggregates both present a mixed picture for growth prospects and inflation outlook But growth seems to be taking hold and the ECB's (unstated) bias now seems to have shifted towards (distant) future tightening rather than possible cuts Effects of past and possible future oil price hikes on inflation expectations, wage settlements and, contrariwise, on output a major uncertainty Key unknowns are the 'flash' estimate of HICP inflation and the Economic Sentiment and Business Climate Indicators for June, all due to be published on Wednesday 30 June, on the eve of the General Council's meeting * Full 6 page report including charts as PDF file

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© Graham Bishop