MNI BRIEF: ECB On Hold, But Data Dependent As Risks Crystalise

The European Central Bank kept rates unchanged on Thursday, noting that while incoming data has been broadly consistent with the Governing Council’s previous assessment of the inflation outlook, upside risks to prices and the downside risks to growth have intensified. (see MNI SOURCES: Ceasefire Reduces Urgency Of ECB Hike Talk )

The Governing Council will "closely monitor the situation and follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance.”
Rate decisions "will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path".

Policymakers said the ECB "remains well positioned to navigate the current uncertainty", noting that the "euro area entered this period of surging energy prices with inflation at around the 2% target, and the economy has shown resilience over recent quarters. Longer-term inflation expectations remain well anchored, although inflation expectations over shorter horizons have moved up significantly."