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The European Central Bank Believes That Ultra-loose Monetary Policy Needs To Be Reassessed


The European Central Bank’s release of the October meeting records shows that the Management Committee stated that in view of the improvement in inflation prospects, it will be necessary to reassess the support of the ultra-loose monetary policy to the economy at some time in the future, and gradually shift to more neutral. However, some indicators that reflect the market's expectations for the future path of short-term money market interest rates are difficult to coordinate with the European Central Bank's forward-looking guidance on policy interest rates. The rise in short-term interest rates may be due to the perception that inflation risks are rising. At the same time, some investors may also pay more attention to the possibility that interest rate hike conditions will be met sooner. The market pricing may also partly reflect the incomplete understanding of the three interest rate hike conditions in the European Central Bank's forward guidance. Obviously, the European Central Bank does not want the market to misjudge the timing of the real interest rate hike, so as not to affect the pace of economic recovery.
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