Intesa Sanpaolo: ECB . In the end, the monetary policy announcement of 16 December was quite articulate, without postponing anything crucial to the meeting of 2-3 February 2022.
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Weekly Economic Monitor – 17 December 2021
Intesa Sanpaolo – Research Department
The European Central Bank is starting a gradual reduction in securities purchases as early as January 2022. The end point is not fixed a priori, but still remains linked to the occurrence of the conditions that will trigger the first rate hike. The new watchwords are „flexibility“ and „optionality“, implying the possibility of changes of pace based on the data flow. The announcement is consistent with a possible start of the rate hike during 2023.
The Fed declares war on inflation and switches back to 1980s mode . The Fed’s pivot in a hawkish direction signals its determination to nip in the bud a 1970s-like wage/price spiral and sets the stage for an early reversal on rates, that may even take place in March.
The week’s market movers
Rather quiet week in the euro area in terms of data releases. In Italy, December confidence indices could report a deterioration in the sentiment of businesses and households. The European Commission’s flash estimate should outline a correction of consumer confidence in the Eurozone. In Spain and the Netherlands, the second estimates of GDP growth in Q3 should confirm the advance readings.
This week’s data releases in the United States should confirm the solid growth trend of final demand and prices in November. Personal spending and personal income should continue to increase, with the core deflator on the rise by 0.4% m/m. Orders of durable goods and existing home sales are both expected to improve, rounding up the positive picture of economic activity. December consumer confidence should stay on a downtrend due to inflation fears.
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