ECB insisting that inflation is largely transient

Nobody expects the ECB Governing Council to make any policy changes at next week’s monetary policy meeting. However, Christine Lagarde will address concerns about rising inflationary pressures and we expect her to reiterate that, even if they are stronger than anticipated, they are likely to prove temporary. She will probably also stress that the ECB’s current guidance implies that rate hikes are further away than suggested by financial markets. Otherwise, the focus will be on when and how to end the PEPP, decisions on which are scheduled for December.