Steen Jakobsen: ECB strategy is praying, hoping and waiting... not exactly action which gives hope for real economy

Fed interest rate decision isn't only one ahead of us. On December 15th European Central Bank decides on its monetary policy. Although it's widely known that it's arduous task to handle, discussion is on, especially right ahead of European inflation print. Let's find out Saxo's Steen Jakobsen point of view.

 

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Supposing European CPI soars again, could ECB choose escape from recession over fighting inflation?

 

ECB and its management are extremely dovish, so effectively they are already and always been on this modus operandi. Their problem is inflation CPI is running at close to 11% and PPI above 40% - the price of high inflation is significantly above increase in employment medium and long term, which is why despite all evidence ECB continues to believe inflation will come magically down to 2-2.5% end of 2023. How this will happen in a global economy of deglobalization and high energy prices in yet to answered.

ECB strategy is praying, hoping and waiting... not exactly action which gives hope for real economy.

 

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