Inflation: I've been analysing the Bank of England's forecast over the past two years – here's how they got it wrong 
FxWirePro: Daily Commodity Tracker - 21st March, 2022 
The RBA has kept interest rates on hold. Here's why it'll be cautious from here on 
Why central banks are too powerful and have created our inflation crisis 
Will the RBA raise rates again? Unless prices surge over summer, it's looking less likely 
The Federal Reserve and the art of navigating a soft landing ... when economic data sends mixed signals 
Why the Bank of England is now more upbeat than the IMF 
Sure, the RBA froze interest rates on Tuesday, but there's plenty of pain to come 
The account of the monetary policy meeting of 15-16 July suggests that the members viewed the ECB's policy measures to be on track, having contributed to improving confidence and growth, to a reduction in economic slack and to money and credit expansion, notwithstanding the transmission lags. The minutes echoed the overall net easing in credit conditions as shown by the most recent bank lending survey, and suggested that TLTRO borrowings were indeed used to grant loans to the private sector.
Against this relatively positive assessment, the discussion highlighted the fragilities of the economic recovery, the weak inflation outlook and the balance of risks still tilted to the downside (even if these risks have not worsened since the June meeting). Quite rightly, the members indicated that attention also needed to be paid to possible changes in commodity prices, to the slowdown in emerging markets and to exchange rate developments to the extent that they could affect the medium-term outlook for price stability. With the ongoing volatility in EM markets, the PBoC's decision to devalue the CNY and weakness in commodity prices, there is no doubt that the ECB will have to focus on these issues in the September policy meeting, possibly providing a revised macroeconomic outlook including a lower inflation path.
Poor liquidity conditions continue to be a critical issue in financial markets. This was echoed by the reference made by Benoit Coeure regarding portfolio managers finding the purchase of eligible covered bonds more challenging. Several factors contributed to this situation. First, euro area covered bond supply had slowed since the end of May and had remained quite low compared with previous years. Second, the period of volatility had reinforced the status of covered bonds as a safe-haven instrument, which was also consistent with their favourable regulatory treatment, including the no bail-in treatment under the Bank Recovery and Resolution Directive. Covered bonds had thus benefitted from the flight to quality and this had possibly deterred some investors from reducing their covered bond positions in favour of other assets with better relative value.
All in all, the Governing Council was once again unanimous in its assessment that it was appropriate to maintain a steady monetary policy course and reaffirmed its intention to carry out asset purchases of EUR60bn per month until September 2016, and in any case, until a sustained adjustment in the path of inflation was visible, consistent with the aim of achieving inflation rates of close to, but below, 2% over the medium term.
"At the same time, the Governing Council highlighted the need for a close monitoring of the situation in financial markets, with a view to their implications for price stability, and a readiness to respond to an unwarranted tightening of the monetary policy stance or a change in the medium-term outlook for price stability",says Barclays.
