The Day at a Glance | October 28 2021

*The European Central Bank decided to keep its monetary stance unchanged.

*European consumers are concerned about inflation as it reaches its highest level since 1993, according to the European Commission`s indicators.

*U.S. GDP increased less than estimated in the 3Q21 (2% vs 2.6%e.).

*Inflation in Spain reaches its highest level in three decades (5.5% annual vs 4.6%e., Oct.).

Economic environment

The ECB is still committed to maintaining stimuli despite inflationary risks. In its monetary policy decision this morning, the European Central Bank once again committed itself to maintaining the asset purchasing program at its current pace and keep interest rates low for a longer period of time. The deposit rate remained at -0.5% and the ECB pointed out that it will remain at low levels until underlying inflation is consistent with the bank`s 2% target. The purchasing program will continue to be carried out at a slightly more moderate pace than the 75 billion monthly available euros and will not be withdrawn until March of 2022. The ECB even maintained its willingness to extend to the program if necessary. The decision to preserve an ultra-accommodative stance was made after Spain`s rate of inflation recorded its highest level in 30 years (5.5% vs 4.6%e.) and an environment in which markets don`t believe the ECB can maintain its stance for much longer. Markets have taken into consideration a 20 base points increase in interest rates at the start of 2023. The ECB`s stance contrasts with the rest of the world`s central banks, which have started to show signs of monetary normalization or have implemented an increase in interest rates in order to face inflationary pressures. Christine Lagarde reiterated in a press conference that the central bank expects inflation to become more moderate in 2022.