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European Central Bank Meeting Minutes: Current Uncertainty Justifies Keeping Interest Rates Unchanged

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On November 27th, the minutes of the European Central Bank meeting showed that its assessment of the inflation outlook remained largely unchanged. Some officials thought that the rate-cutting cycle had ended because the favorable outlook was likely to continue unless risks materialized. The central bank considered that adopting a prudent strategy could enhance the likelihood of maintaining a favorable outlook. From a strategic standpoint, the monetary policy stance should not be adjusted for mild and temporary inflation fluctuations around the target but only when a significant deviation from the target was expected in the medium term. However, most committee members believed that the risks surrounding the inflation outlook were balanced, and the inflation outlook remained more uncertain than in the past. Overall, the option value of waiting for more information remained significant. (FXStreet)
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