Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

17 August 2005

EZA 696: Briefing Note




ECB Council Post-Meeting Assessment, August 2005.
Governing Council sees existing policy stance as appropriate but remains vigilant. Slight further shift in emphasis from demand weakness towards potential inflation risks.

SummaryAs foreshadowed in our ECB Council preview [EZA693/01Aug05], at its meeting on 4 August the Governing Council confirmed that the existing monetary policy stance was appropriate, given the current outlook for price stability over the medium term but that it would remain vigilant. The Governing Council's latest assessment of economic and monetary developments, as set out in the Editorial of the ECB's August Bulletin, is essentially the same as in July but with a slight further shift in emphasis away from weak demand and towards potential inflation risks over the medium term. While still acknowledging downside risks to growth from high oil prices and weak consumer confidence, the Governing Council continue to expect the euro area economy to expand in a sustained but gradual manner but, whereas a month ago they saw no signs as yet that a sustained recovery had already started, they now see some signs of improvement in the latest economic data and survey indicators. As in July, the Governing Council find no evidence of underlying domestic inflationary pressures building up but again point to the upside risks to price stability from oil price developments and possible second-round effects on wages and prices and from the future evolution of indirect taxes and administered prices. However, whereas a month ago the Bulletin Editorial noted that domestic inflationary pressures 'remain contained', it now speaks of 'limited domestic inflationary pressures ...... at present'. Once again the monetary analysis shows low interest rates fuelling robust growth of the more liquid components of broad money and strong credit expansion, which 'continues to support the case for vigilance with regard to upside risks to price stability over medium to longer horizons'.

Contents
.

Figures
.



© Graham Bishop

Documents associated with this article

EZA696.pdf


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment