ECB January Meeting Minutes: A Turnaround From December

The ECB January Meeting Minutes were released from the monetary policy meeting held in January. The minutes surprised the markets as policymakers were unwilling to make any changes in its forward guidance for the markets.

The minutes revealed a stark turnaround from officials who had at the previous meeting discussed opportunities for tweaking the language of its monetary policy in order to prepare the markets for potential tightening.

While the earlier minutes from the previous month saw a hawkish twist, January’s meeting was a complete turnaround in comparison.

The ECB January Meeting Minutes showed that policymakers rejected token changes to the central bank’s policy message as officials argued that it was premature to signal a policy change. The weak stretch of inflation was attributed as one of the reasons. Recent data on the inflation front showed that consumer prices in the Eurozone started to weaken. Headline consumer prices were seen rising to a high of 1.5% mid last year before prices started to ease back again to 1.3% at the latest reading as of January 2018.

Despite the dovish message, officials are still looking at tweaking the central bank’s stand on monetary policy and could start later this year. The ECB’s next monetary policy meeting is due in early March. No changes are expected from the central bank at next month’s meeting but focus is likely to be on the weaker pace of inflation.

“Changes in communication were generally seen to be premature at this juncture,” policymakers said. “Monetary policy would continue to develop… with a view to avoiding abrupt or disorderly adjustments at a later stage.”

On the economic front, activity in the Eurozone continues to rise with latest data suggesting that the momentum in growth was firmly entrenched. However, given the high levels of activity previously, which sent the Eurozone GDP to a decade high was starting to moderate.