ECB Economic Bulletin Focuses on Inflation but also Reflects Optimism

While there were no stats, the Economic Bulletin was in focus this morning.

Economic Bulletin

Salient points from the Economic Bulletin included:

  • At the global level, economic activity continued to expand, albeit at a measurably moderating pace.
  • A combination of factors, most prominently persistent supply bottlenecks impacted.
  • Price pressures remain elevated on account of increasing food an energy inflation.
  • The euro area economy continued to recover strongly, although momentum moderated to some extent.
  • Output is expected to exceed its pre-pandemic level by the end of the year.
  • A high share of people now vaccinated is supporting consumer spending, though higher energy prices may reduce purchasing power in the months to come.
  • While the current phase of higher inflation will last longer than originally expected, inflation is expected to decline in the course of the next year.
  • The Governing Council sees the risks to the economic outlook as broadly balanced.
  • If supply shortages and higher energy prices last longer, these could slow the recovery.
  • Economic activity could outperform current expectations if consumers become more confidence and save less than currently expected.

Market Impact

Ahead of today’s Economic Bulletin, the EUR had risen to a pre-stat and current day high $1.14877 before falling to a pre-stat and current day low $1.14540.

In response today’s Bulletin, the EUR rose to a post-stat high $1.14716 before falling to a post-stat low $1.14592.

At the time of writing, the EUR was down by 0.16% to $1.14605.

111121 EURUSD Hourly Chart

Next Up

The ECB’s economic forecasts will be of particular interest, with how the ECB views the impact of inflation on the economic outlook key.

Later in the day, ECB Governing Council member Lane will be in focus.