ECB hints at package of stimulus measures

Thursday, 22. August 2019 14:09

The drop in long-term inflation expectations is "a matter of concern," officials from the European Central Bank wrote at their meeting that ended on July 25. The minutes released on Thursday also highlight the risk that the decline in manufacturing in the Eurozone would spread to services "sooner or later" and reveal that policymakers agreed a package of instruments to prop up the economy, if it is perceived as such, would be more effective than a combination of measures.

ECB said growth could be revised lower and attributed the slowdown in global trade to weakened investment and stumbling growth in consumption of durable goods together with the current trade frictions.

"When discussing the inflation outlook, it was underlined that although wage growth had remained solid and some measures were above their longer-term averages, both market-derived and survey-based measures of inflation expectations had declined. Furthermore, the lag in the pass-through of cost pressures to prices implied a compression of profit margins and raised the questions of how long this could last and what it meant for price adjustments," the document adds.

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