Future Monetary Policy Path Sets Markets Against Central Banks

Exclusive insight for TMI subscribers! Northern Trust Asset Management share a monthly market commentary for treasurers.

Eurozone Market Update

Headline annual inflation in the euro area dropped to 9.2% in December, the first time it has been in single digits since August. Core inflation remained sticky, however, rising to 5.2%, and above market expectations of 5.0%. This raises a concern as the ECB focuses on core inflation numbers when deciding about upcoming hikes. On the targeted longer-term refinancing operations early repayment programme, January’s repayment of €62.6 billion — close to the market expectations of €65 billion — failed to swing the market. According to the ECB’s minutes, the near-term economic outlook is slowly improving, helped by mild weather in December, reduced gas prices, China reopening and government support. The risk of a deep recession has waned (for now).

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