• Today’s Comment will be solely about inflation in the Eurozone and the consequences for ECB policy rates. Look forward to the TLTRO/liquidity part of the analysis next week. Since this piece is somewhat longer than usual (ahem), we start off with the summary.

• On inflation, if one looks through the base effects, post-pandemic outbreak, the trend rate of core inflation in the Euro Area appears to have increased. But the trend increases in core inflation certainly do not call for a Fed-like U-Turn. Pricing in ESTR OIS of tighter financial conditions before the new maintenance period after the Governing Council of October 27 needs to be faded.

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