ECB: PMIs suggest no need to be trigger happy

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Divyang Shah

The PMI data today show that the pace of Eurozone growth is at its fastest in four years.

The data suggest that there is little need for the ECB to rush into delivering further policy easing especially at its meeting today.

The eurozone composite PMI for August came in at 54.3 (53.9 in July) compared to expectations for 54.1. There are still pockets of concern such as France which seems to be losing momentum, but overall the data is positive enough to provide flexibility to the ECB.

The likelihood of lowflation persisting on the back of lower oil prices as well as still low inflation expectations suggest that the ECB will still choose to deliver a dovish message.

The key objective will be to point to the ECB having the room and flexibility to deliver further monetary policy easing as opposed to having run out of ammunition.

Divyang Shah
A man stands in front of "SUPERFLEX, Euro 2012"