Central Bank

ECB Insight: Upending Her Own Rates Guidance, Lagarde Wants to Be Seen as Frontloading, Not Overdelivering

By David Barwick – FRANKFURT (Econostream) – The European Central Bank on Thursday may have over-delivered with respect to its new anti-fragmentation instrument, even discounting somewhat low expectations, while on the interest rate front we see it as an open question whether it is in the process of over-delivering or has merely frontloaded what the Governing Council intended anyway.

21 July 2022

ECB Insight: Who’s for 50 Basis Points? No Shortage of Likely Advocates Even Beyond the Usual Suspects

By David Barwick – FRANKFURT (Econostream) – Considering the European Central Bank Governing Council member by member with respect to the feasibility of a 50-basis-point hike this week, our conclusion is that there are three main scenarios under which the ECB sticks to 25.

20 July 2022

ECB’s Makhlouf: Economic Risks of Climate Change Evident, Need Global Response

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gabriel Makhlouf on Tuesday spoke out in favour of a global response to the threat posed to economies by climate change.

19 July 2022

ECB Insight: At the Eurotower, Time to Deliver, Perhaps Even Over-Deliver

By David Barwick – FRANKFURT (Econostream) – Perhaps the less edge-of-the-seat issue to be decided by this week’s European Central Bank monetary policy meeting, most seem to think, is the size of the first ECB rate hike in a decade, with 25 basis points widely seen as approaching but not quite reaching a certain inevitability.

19 July 2022

Exclusive: ECB Insider: ‘Very Unlikely’ That We Will Do More Than 25 Basis Points in July

- ECB insider: We committed ourselves strongly to 25 basis points in July already
- ECB insider: Still, if case is made that something changed significantly, then we could do more

15 July 2022

ECB Insight: Parity or Not, ECB Insiders’ Comments over Last Months Suggest Euro Per Se Unlikely to Drive Policy

By David Barwick – FRANKFURT (Econostream) – Striking though the euro’s latest descent on foreign exchange markets may be, with the common currency now having reached parity with the dollar, a review of European Central Bank insider comments in recent months leaves us sceptical that the latest developments will induce the ECB to take any steps it cannot clearly justify on the basis of inflation.

14 July 2022

ECB’s Knot: ‘Unexpected Deterioration in Economic Conditions May Test Financial Resilience’

By David Barwick – FRANKFURT (Econostream) – Suddenly worse economic conditions could strain the resilience of the financial system, European Central Bank Governing Council member Klaas Knot said Wednesday.

13 July 2022

ECB’s Villeroy: Not So Much That the Euro Is Weak, But Rather That the Dollar Is Strong

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Wednesday said that the euro’s foreign exchange weakness was positive for exporters but unhelpful with respect to inflation.

13 July 2022

ECB’s Nagel: I Consider Spreads Fundamentally Justified, Absent Evidence to the Contrary

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Tuesday said that monetary policy normalisation would inevitably be accompanied by risk premia and that absent evidence to the contrary, he would consider widened spreads to be warranted by fundamentals.

12 July 2022

ECB Insight: Herodotou Faces Facts, Holzmann Tries to Make Waves, and Stournaras Seems Torn

By David Barwick – FRANKFURT (Econostream) – Of the various members of the European Central Bank’s Governing Council to have spoken out over the last few days, it may be that Central Bank of Cyprus Governor Constantinos Herodotou made the most meaningful contribution to the public discourse about monetary policy normalisation.

11 July 2022

ECB’s Stournaras: Anti-Fragmentation Tool Might Never Actually Need to Be Used

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s new anti-fragmentation tool might never require actual deployment, ECB Governing Council member Yannis Stournaras said on Saturday.

11 July 2022

ECB’s Holzmann: ‘An Interest Rate Hike of 0.75% Might Be Necessary’

By David Barwick – FRANKFURT (Econostream) – The European Central Bank might have to hike rates by as much as 0.75 basis points if things don’t get better, Governing Council member Robert Holzmann said on Saturday.

11 July 2022

ECB’s Visco: Must Counter Risk of High Inflation Affecting Expectations

By David Barwick – FRANKFURT (Econostream) – The European Central Bank has to address the danger than elevated inflation rates could lead to a dis-anchoring of expectations, ECB Governing Council member Ignazio Visco said on Friday.

8 July 2022

ECB’s Herodotou: ‘Broader and Intensified Inflation Pressures … Could Require Quicker Rate Moves’

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Constantinos Herodotou on Friday said that inflation in excess of 2% was not per se grounds to hike official borrowing costs.

8 July 2022

ECB’s Centeno: Hiking Cycle Desirable, But Must Mitigate Associated Risks

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mario Centeno on Thursday endorsed a cycle of interest rate hikes but urged that risks associated with policy tightening be addressed.

7 July 2022

ECB Insight: Anti-Fragmentation Tool Design a Tough Slog as Council Members Prefer Conservative Approach

By David Barwick – FRANKFURT (Econostream) – It is very clear that the European Central Bank has its work cut out for it in attempting to come up with an anti-fragmentation tool, Econostream can only conclude after having recently heard opinions on the subject from three more ECB insiders who all seemed keen that such an instrument be designed and deployed conservatively.

7 July 2022

Central Bank of Ireland: Growth Enduring Despite Uncertainty and Growing Downside Risks

By David Barwick – FRANKFURT (Econostream) – Irish economic growth should hold up relatively well over the medium term, but uncertainty is high and the outlook is subject to risen downside risks, according to the Central Bank of Ireland on Thursday.

7 July 2022

ECB’s Villeroy: To Keep Hiking Past September Until Neutral Rate Reached, Unless Data Require More

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member François Villeroy de Galhau on Thursday said that the ECB would continue hiking interest rates post-September to reach the neutral level, at which point tightening would cease unless inflation dictated otherwise.

7 July 2022

ECB’s de Cos: Moderate Wage Growth, Squeezing of Trade Margins to Prevent Price-Wage Spiral

By David Barwick – FRANKFURT (Econostream) – The projection of medium-term price stability rests on the assumption that moderate wage developments and reduced trade margins will prevent a price-wage spiral from emerging, European Central Bank Governing Council member Pablo Hernández de Cos said Thursday.

7 July 2022

Exclusive: ECB Policymakers Unwavering in Support for Tighter Monetary Policy

- ECB insider: ‘Hard to imagine a substantial improvement in the inflation outlook’
- ECB insider: ‘I see only upside risks, not downside risks’
- ECB insider: ‘Might be a need for stronger action from the central bank’
- ECB insider: Could be dangerous to do less than what our HICP projections assume
- ECB insider: Stagflation ‘would still require raising interest rates anyway’

5 July 2022