ECB Monetary Policy Meeting Accounts: Incoming data pointed to continued positive but modest GDP growth

The ECB released account of its January 22-23 monetary policy meeting. It noted that:

• while there might have been a bottoming-out in manufacturing, it was too soon to conclude that the slowdown in growth in the services sector had stopped, as spillovers to services could emerge with a lag and the sector's current resilience might not last;
• nowcasting models, which took recent data releases into account, pointed to a stabilisation in growth at low rates, below estimates of potential growth;
• members were encouraged by the fact that headline and underlying inflation had recently evolved in line with the December staff projections and by the evidence of a continued gradual upward trend in some indicators of underlying inflation;
• reference was made to developments in a number of euro area indicators; it was felt to be important to acknowledge these positive signs and care should be taken to avoid being too slow to change the risk assessment;
• some caution was also expressed about becoming too optimistic;
• remark was also made that higher housing prices could lead to fragilities in the financial system which might be insufficiently addressed by macroprudential policies.