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According to Carsten Brzeski, chief economist at ING, the ECB is concerned is probably the main message from the just-released minutes of the July meeting.

Key Quotes

“In its discussion on both the outlook for eurozone growth and inflation, the ECB’s assessment had become more pessimistic. As regards growth, the minutes say that it “was also considered that these downside risks had become more pervasive and that their persistence could ultimately also necessitate a revision to the baseline growth scenario”. Looking at inflation, the recent declines in both actual inflation and longer-term inflation expectations were “a matter of concern”.”

“The official views and tone presented during the press conference in July were just a normal consequence of the discussion. The minutes do not say anything about how close the ECB is to actually act but reading between the lines, the July meeting was probably as close as it can get without actually acting.”

“Interestingly, the minutes also suggest that there is a majority at the ECB in favour of a package of new measures, rather than a series of single measures. A “combination of instruments with significant complementarities and synergies, since experience had shown that a policy package – such as the combination of rate cuts and asset purchases – was more effective than a sequence of selective actions”.”

“Looking ahead, the “relevant committees” are still preparing different options for the Governing Council meeting on 12 September.”