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ECB Insight: Exchange Rate Played No Role Thursday, Econostream Understands

By David Barwick – FRANKFURT (Econostream) – Absent from both European Central Bank President Christine Lagarde’s monetary policy statement and the entire subsequent press conference on Thursday was any mention of exchange rate developments.

Exclusive: ECB Very Likely to Hike by 25bp in July, But More Not Absolutely Impossible

- ECB insider: ‘Very high probability it’s going to be 25 basis points’ in July
- ECB insider: If inflation expectations de-anchored, ‘would we stick to 25? I don’t think so’

ECB Insight: Recent Convergence of Council Views Seen Continuing to Set the Tone

By David Barwick – FRANKFURT (Econostream) – Speaking less than two weeks ago to Econostream, a European Central Bank insider jokingly commented that ‘it seems that we don’t even meet in June. It seems that everything is decided already.’

ECB Insight: Insiders Confident of Council’s Ability to Act Despite North-South Divide

By David Barwick – FRANKFURT (Econostream) – Perhaps as part of the recent convergence of views among Europe’s monetary policymakers in the face of worryingly high inflation, European Central Bank insiders seem confident that ECB policy won't be hindered by the way philosophies across the Governing Council correlate to the indebtedness of individual members’ respective country of origin.

Exclusive: Many ECB Insiders Still Undecided, But Clear Potential for Compromise Involving 50 Bps

- ECB insider: Gradualism is ‘a relative concept’, not an automatic objection to 50 bps
- ECB insider: Once Fed decided on 50 bps each meeting, obvious ECB must think about our steps
- ECB insider: Starting with 25 bps and then doing 50 would be ‘more gradual than 50 on the spot’
- ECB insider: ‘The relevant thing will be the path’ of rates, not so much each step

ECB’s Villeroy: Inflation is Too Broad, Requiring a Normalisation of Monetary Policy

By David Barwick – PARIS (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Thursday said that high core inflation required that monetary policy be normalised.

They Said it - Recent Monetary Policy Comments Made by ECB Governing Council Members

By David Barwick – FRANKFURT (Econostream) – The following is a reasonably complete compendium of the most recent comments made by European Central Bank Governing Council members with respect to monetary policy. Updates are made on a periodic basis.

Exclusive: ECB Resigned to Euro Weakness Versus Dollar, say Insiders

- ECB insider: ‘This is a war that is already lost’
- ECB insider: ‘No point in fighting something that is going to happen anyway’
- ECB insider: ‘We are not going to do FX interventions’
- ECB insider: ECB won’t explicitly take any specific action because of the exchange rate
- ECB insider: ‘Parity for euro-dollar is just one figure like the others’

ECB Insight: Lane Confirms Key Specifics of Coming Monetary Policy Normalisation Steps

By David Barwick – FRANKFURT (Econostream) – European Central Bank Chief Economist Philip Lane in an interview published Monday confirmed the key messages of President Christine Lagarde’s blog a week ago today, presumably putting to rest the scepticism of at least one Governing Council member as to whether the ECB would really deliver the end of net asset purchases in the coming weeks and – probably - a deposit rate of zero percent by the end of the summer.

Exclusive: Permanent Anti-Fragmentation Tool Not Seen as Essential by Most ECB Insiders

- ECB insider: We stand ready to react flexibly to fragmentation; ‘forget about specific tools’
- ECB insider: I assume there will be similar provisions for APP as for PEPP reinvestments
- ECB insider: Hiking rates not so risky that we need to prepare for damage control ex ante
- ECB insider: It’s the sovereigns, not the ECB, that need to take care of their spreads

Exclusive: ECB Still Likely Far from Ready to Discuss QT, But Topic Could Come up Sooner Than Expected

- ECB insider: Must see other jurisdictions’ QT experience, so ECB hawks not yet pushing the issue
- ECB insider: QT is ‘one of the optionalities that we have if there is a need to start it earlier’
- ECB insider: ‘Things are moving so fast that I wouldn’t be surprised at being surprised’ on QT

ECB’ Panetta: Should End Net Purchases and Hike, But Need Gradualism and Anti-Fragmentation Tool

By David Barwick – FRANKFURT (Econostream) – The European Central Bank should end net asset purchases and then gradually get official borrowing costs out of negative territory, ECB Executive Board member Fabio Panetta said Wednesday.

ECB’s de Guindos: Main Threat to EMU Financial Stability from War’s Macroeconomic Impact

By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Wednesday said that the main threat to euro area financial stability stemmed from the macroeconomic ramifications of Russian military aggression

ECB’s Rehn: Should Hike Deposit Rate to -0.25% in July and to Zero in the Autumn

By David Barwick – FRANKFURT (Econostream) – The European Central Bank should hike its deposit facility rate by 25 basis points in July and then by another 25 bps in the autumn, Governing Council member Olli Rehn said on Wednesday.

They Said it - Recent Monetary Policy Comments Made by ECB Governing Council Members

By David Barwick – FRANKFURT (Econostream) – The following is a reasonably complete compendium of the most recent comments made by European Central Bank Governing Council members with respect to monetary policy. Updates are made on a periodic basis.

ECB Insight: Lagarde Confirms Two Hikes Coming Up, Dumps Water on Programme to Contain Spreads

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Monday confirmed that the Governing Council would hike rates in July and strongly suggested that a second rate hike would take place in September.

German Bundesbank Sees 2022 German HICP Around 7%, Warns of Supply Constraint Deterioration

By David Barwick – FRANKFURT (Econostream) – German consumer price growth should average around 7% this year, but supply constraints could worsen considerably yet as China grapples with the pandemic, the German Bundesbank said on Monday in its latest monthly report.

Exclusive: Symmetrical Distribution of Key ECB Rates Optimal, But No Urgency Seen

Exclusive: Symmetrical Distribution of Key ECB Rates Optimal, But No Urgency Seen
- ECB insider: Spread calibration need not be objective of early phase of policy normalisation
- ECB insider: Huge liquidity surplus that we now have ‘is going to be there for a while’

ECB’s Visco: We Will Move Out of Negative Territory, but it Is Not Obvious to Where

By David Barwick – FRANKFURT (Econostream) – European Central Bank interest rates can move out of negative territory, but the process must be gradual and it is not obvious how far it can go, ECB Governing Council member Ignazio Visco said on Friday.