- Medium-term inflation outlook presents clear upside risks
- Further policy adjustment is warranted
- The neutral interest rate provides limited guidance here
- A bigger-than-expected rate hike may heighten volatility, could be interpreted as signalling a higher terminal rate
Some token remarks for the most part there by Panetta. The ECB's outlook on rates right now is very much a case of playing things by ear. If economic conditions deteriorate sharply, it is hard to imagine them being too aggressive as we approach the turn of the year.
