• Growth driven by services, notably in IT and communications
• Manufacturing is resilient
• Food inflation increased
• Construction momentum picking up
• Government spending should strengthen demand
• Indications of underlying inflation have changed little in recent months and remain consistent with costs
• Forward looking indicators and surveys point to a continued moderation in labor costs
• Most measures of longer-term inflation around 2%
• Uncertainty could weigh on demand
• Inflation could turn out higher if there is persistent upward shift in energy prices

The euro is higher since the speech started but that’s because US initial jobless claims were released and they showed a jump. Combined with a poor Challenger job cuts report and soft ADP/ISM services employment and the market is sniffing out a softer US jobs market. That has the US dollar sagging across the board.

Q&A:

• We are in a broadly balanced place in our risk assessment
• We are not seeing a reduction in the range of risks
• We have for a long time projected 2026 inflation undershootings
• We are particularly attentive to services prices, wages
• The wage tracker is guiding us to moderation
• We will give a checklist to EU leaders before the summit on what the ECB regards as growth enhancing measures

The market is comfortable with the ECB staying on the sidelines

This article was written by Adam Button at investinglive.com.



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