Initial Take on ECB

Besides the boilerplate comments about inflation being anchored, emergency measures are temporary, the important part of the prepared remarks are the new staff forecasts--slightly higher forecasts this year, a little less next year and slightly higher inflation forecasts, largely a function of higher commodity prices.

**2011 GDP central forecast 1.2% down from 1.5%

**2010 CPI central forecast 1.5% from 1.2%

**2011 CPI central forecast 1.6% from 1.5%

Trichet seems to play down the contraction in M3 saying it understates the underlying trend and that pressure on it may be easing.

Even though the euro has shed about a third of a cent since Trichet has begun talking the market's interest in the refi operations and sterilization of bond purchases is still awaited to be addressed.
Initial Take on ECB Initial Take on ECB Reviewed by Marc Chandler on June 10, 2010 Rating: 5
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