HSBC Sees ECB Sticking With Easy Stance Despite Record Inflation

(Bloomberg) --

Record inflation won’t stop the European Central Bank from carrying on with its ultra-loose stance, according to HSBC Holdings Plc research.  

Senior economist Fabio Balboni and colleagues see the euro-area inflation rate hitting an all-time high of 4.5% this month, just as policy makers gear up to lay out the course for their stimulus program. 

“The high November inflation print may make it harder for ECB President Christine Lagarde to maintain the ‘transitory inflation’ line,” they wrote in a note to clients. “We still expect the ECB to ‘look through’ the current inflation surge and announce further QE support for 2022 in December.” 

ECB Executive Board member Isabel Schnabel said earlier this week that inflation rates should “decline visibly” next year, although there is more uncertainty about the “pace and extent of the slowdown.”

The HSBC economists expect the inflation rate to clock in at just 1.4% late in 2022. 

“November should mark the peak for both headline and core inflation,” they said. “Futures prices point to a significant moderation in gas and electricity prices after spring.” 

©2021 Bloomberg L.P.