ECB preview: Still watching the data

The ECB’s January meeting should be uneventful with no specific policy announcements in the cards. Although latest growth data have been rather disappointing, they do not by themselves demand any change of tone. Equally, the rise in headline inflation in December was in line with expect ations and should not lead to a re-assessment of the inflation path from here onwards . That said, latest statements from several Governing Council members s uggest that the ECB is warming up to the idea of a rate cut during the “summer”. The main hurdle for a clear shift in tone towards a rate cut is wage growth . Only once it has become clear that wage growth has peaked , will the ECB start c ommunicating more forcefully the intended timing of a rate cut. For now, we expect the ECB to stress the data dependency of any future decision.