11 April 2005

EZA 673: ECB Council Post Meeting Assessment April 2005

Please see attached briefing from John Arrowsmith.
Interest rates stay on hold. Policy stance re-sharpened a little, to 'vigilance of the essence'. Slightly more concern at possible oil price feed-through and continuing concern about money/credit growth and liquidity overhang. Less ECB confidence about near-term growth outlook. Firm language, but no threats, on need for fiscal discipline.

SummaryEZA Conclusion: We maintain our view that the ECB's policy stance on balance remains neutral and our central prognosis that rates should remain on hold at least until end-2005 and even into 2006 Q1...... BUT .... political/fiscal/inflation risks, if they materialised, could trigger earlier action.

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© Graham Bishop