Minutes from the latest ECB meeting have just been released. As expected, the
ECB Minutes did not present any new information regarding further steps that the
ECB intends to take regarding fiscal policy. Markets were primarily focused on
whether ECB central bankers discussed the possibility of winding down the
PEPP programme in March 2022. Investors were also hoping that today’s minutes
would provide some guidance on rate hikes.

Here are key takeaways from the document:
· Normal for the latter stages of a recovery to be accompanied by lower
growth
· Most of the recent upward pressure on prices was coming from base effects
· It was stressed that the current outlook clearly lacked the stagnation
element
· Growth momentum was declining, but within a still strong recovery
· It was recalled that stagflation experiences in the 1970s occurred in a
different environment, in which indexation allowed wages to react to energy
prices
· Members broadly agreed with the assessment by Mr Lane in his
introduction i.e. inflation expected to decline in the course of 2022
· Members widely agreed on the expected hump-shaped pattern in the
shorter-term inflation outlook
· Confidence was expressed that the effects of higher energy prices and of
supply bottlenecks would be temporary, although the decline in inflation in
2022 would now take longer than previously expected

The market reaction to today’s ECB Minutes is negligible. Earlier EURUSD broke
above the upper limit of the wedge formation and if current sentiment
prevails resistance level at 1.1260 may be at risk.