National Bank of Belgium released its new projections and its governor Jan Smets uses this opportunity to comment on monetary policy
- 2016 HICP forecast down from 1.9 to 1.6%; 2017 up from 1.7% to 1.8%
- unit labour costs likely to fall 0.3% in 2016 (bad for inflation prospects) and rebound later
- there is no evidence that inflation expectations get entrenched at low levels
- but we need to stay vigilant for all such signals
- we are not in a new decision moment for the ECB
We also had some quotes from another ECB member Liikanen:
- it is crucual that cpi does not get entrenched in second round effects
- inflation remains subdued and long term expectations are still low.
Not the first time ECB members repeat the same (and quite vague) key messages following a meeting. Market tolerance for nothing new from the ECB may be getting thinner unless there is some rebound in the data soon.
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