Exclusive News

Exclusive: Transcript of Econostream’s Interview with German Finance Agency’s Tammo Diemer

- Diemer: Don't have to make changes to auction calendar just because energy prices lower
- Diemer: Inversion of German yield curve has no impact on our issuance activities
- Diemer: Want to be a predictable issuer and want to be an issuer that focuses on auctions
- Diemer: Will do whatever is needed and in our hands to support functioning of Bund market
- Diemer: Need to create additional incentives to attract new investors to green segment

3 April 2023

Exclusive: Transcript of Interview with ECB Governing Council member Scicluna on 21 March 2023

- Scicluna: Ramifications of bank turmoil to be felt for some time, also in Europe
- Scicluna: ‘We strongly believe in the robustness and resilience of our system’
- Scicluna: If we don’t see core inflation peaking, then our job is to continue attacking inflation
- Scicluna: Would be presumptuous for me to say now that I’ll want 50bp in May; must see data
- Scicluna: ‘Nowhere near’ the wage-price spiral we’ve had in the past
- Scicluna: Updated forecasts appeared to us to be out of date the same day
- Scicluna: If core inflation rises, then those who are for tightening will get the upper hand
- Scicluna: ‘Wouldn’t be highly concerned with the results we’re getting from wage settlements so far’
- Scicluna: ‘No indications that we’re seeing’ the light at the end of the inflation tunnel
- Scicluna: Mopping up liquidity is another way to subdue inflation
- Scicluna: Last week’s decision gives sense of stability; you don’t create more stability by hesitating

22 March 2023

Exclusive: ECB Insider: I’d Support Another 50BP Hike in May, Unless Economy or Core HICP Soften

- ECB insider: ‘No doubt that we are still in a tightening mode’
- ECB insider: No hurry to decide on next move, can wait until the time comes
- ECB insider: 50bp hike not much when real interest rates clearly negative
- ECB insider: 4.5% terminal rate only if inflation turns out unexpectedly persistent

17 March 2023

Exclusive: ECB Insider: Slowing to 25BP But Hiking for Longer Could Be a Compromise

- ECB insider: Reducing pace of hiking post-March to 25bp the correct strategy
- ECB insider: Others will oppose post-March slowdown of tightening pace
- ECB insider: ‘Very little discussion that we are now in restrictive territory’
- ECB insider: Some Council members will see the ECB as no longer very far from the terminal rate

8 March 2023

Exclusive: ECB Insider: Some Indicators Suggest Core Inflation Momentum Not Weakening

- ECB insider: Core inflation to remain relatively high and away from our target this year
- ECB insider: Some concerns that wage demands could pick up quickly in 1H
- ECB insider: Increasing trend of firms protecting their margins contributing to price pressures
- ECB insider: Hawks ‘not very comforted’ by assurances of lower medium-term price pressures
- ECB insider: Some hawks question medium-term inflation outlook due to 2d-rd effects, energy prices

1 March 2023

Exclusive: ECB Insider: March Forecast Revision Unlikely To Be as Big as Market Thinks

- ECB insider: Updated forecasts will maintain view of more persistent inflation dynamics
- ECB insider: Don’t expect any material change in core inflation dynamics in 2023
- ECB insider: Not seeing much inflation from the end of China’s zero-Covid policy

24 February 2023

KfW Does Not Currently See Issuance Increase in 2023; Plans to Issue New 10Y EUR Soon, Perhaps in Q1

- KfW: Cost benefits of issuing US dollar bonds ‘not that obvious anymore’
- KfW: Optimistic that in Q2, ‘we'll find a good window’ to issue US dollar-denominated bonds
- KfW: Aim to reach average maturity of five to six years; don't plan many long-term fundings

23 February 2023

Rates To Remain Slightly Above Neutral Until 2025 or 2026, ECB’s Centeno Says

- Centeno: When we stop hiking, we’ll be confident we’ve done enough for price stability
- Centeno: Don’t see upside risks to inflation, given December forecast revisions
- Centeno: ‘Inflation is going down faster than what we expected in December’
- Centeno: Somewhat uneasy about how fast ECB policy tightening has occurred
- Centeno: Observed euro area average wage increase can’t be considered 2d-round effect

14 February 2023

Exclusive: ECB’s Kazāks: Rates Need to Keep Rising After March, But Too Soon to Say How Fast or How Much

- Kazāks: ‘Getting to 3% in March is a good choice that … will take us into restrictive territory’
- Kazāks: ‘Rates will need to go up at further meetings’ even after March; 'we are on a solid path of rate increases' 
- Kazāks: ‘At some point we’ll reduce our speed’, but ‘by no means’ in March
- Kazāks: Hiking more than 50bp in March ‘would be reckless’, not needed in view of previous steps
- Kazāks: Too early to say how big May rate hike should be
- Kazāks: ‘Quite likely that there’s not going to be a recession at all’
- Kazāks: Once at terminal, expect to ‘stay there for an extended period’; rate cut in 2023 would be 'way too premature'
- Kazāks: ‘Terminal rate is by no means 3%, that has to be clear’, but ‘I also don’t think we will go as high as the US’
- Kazāks: Baseline would be ‘more benign inflation projections in March, but there are risks on both sides’

9 February 2023

CEEMEA Exclusive: Poland DMO Head: Yen Bonds Likely, See Lack of Demand for Linkers

- Poland DMO head: International markets ‘not critical source of funding’ for Poland
- Poland DMO head: See ‘clear need’ to be present in Japan
- Poland DMO head: Resolution of EU funds dispute would be desirable for debt management
- Poland DMO head: Negative CJEU outcome could be ‘black swan’ for Polish bonds

17 January 2023

Exclusive: ECB Insider: Stronger-than-Expected Eurozone Economy Favours Council Hawks

- ECB insider: Easier to hike interest rates when labour markets are holding up well

12 January 2023

Exclusive: Slovenia DMO Head: Pre-Funded About a Third of 2023 Funding Needs

- Slovenia DMO head: 2023 syndications better done sooner rather than later
- Slovenia DMO head: ‘Contemplating a return to the US dollar market’ this year
- Slovenia DMO head: Increase in Slovenian budget deficit shouldn’t make life difficult
- Slovenia DMO head: Unlikely to revisit ultra-long end of yield curve for now
- Slovenia DMO head: Braced for ECB active bond sales

12 January 2023

Exclusive: ECB Insider: QT Decision ‘Easier’, Less Controversial than Rate Hike

- ECB insider: No insistence on QT sequence with respect to TLTRO repayments or rate hikes
- ECB insider: Average €15 billion a month of QT ‘a very good start’
- ECB insider: ‘Most likely’ that all maturing bonds will be treated equally
- ECB insider: In terms of QT, ‘we have not done anything that markets were not expecting’

20 December 2022

Exclusive: ECB Insider: Plan Now Is to Hike at Least Three Times in a Row by 50bp

- ECB insider: Very clear that we’re going to hike by 50bp in February
- ECB insider: Wouldn’t be surprised if someone questions need for 50bp in March
- ECB insider: Policy will be restrictive as of February rate hike
- ECB insider: Terminal rate has now risen
- ECB insider: December Governing Council decision could have gone either way, 50bp or 75bp
- ECB insider: QT’s impact on monetary policy tightening is ‘minimal’
- ECB insider: QT complements rate hikes, not a substitute for them
- ECB insider: ECB staff probably assumes no need for more big revisions in next projection exercise
- ECB insider: See upside risks to 2025 inflation, especially to core

16 December 2022

TRANSCRIPT: Interview with European Central Bank Governing Council member Mario Centeno dated 29 November 2022

By David Barwick – FRANKFURT (Econostream) – Following is the full transcript of the Econostream interview dated 29 November 2022 with European Central Bank Governing Council member Mario Centeno:

30 November 2022

Exclusive: ECB’s Centeno: ‘We Are Probably Close to Neutral Levels … 75BP Is Not a Norm’

- Centeno: If Council ‘sees the need to take policy rates above neutral levels it will do so temporarily’
- Centeno: ‘Very important to underline that any rate hikes above neutral levels are supposed to be temporary’
- Centeno: Rates now closer to normal, but ‘this is no guarantee that further steps are dispensable’
- Centeno: ‘A decision completely aligned with market expectations is not guaranteed’
- Centeno: ‘Adding more predictability and the rationale to our decisions will be key’
- Centeno: ‘Financing conditions are no longer very accommodative’
- Centeno: ‘Our decisions cannot be compared, in size, with those of the Fed, as conditions differ substantially’
- Centeno: Key principles to reduce APP portfolio should exclude any resurgence of fragmentation

30 November 2022

Exclusive: ECB Insider: See No Realistic Scenario Where We Reduce Balance Sheet by Much Next Year

- ECB insider on QT: ‘Even if there’s a discussion, we still have fears’
- ECB insider: ‘It can be very fragile on European bond markets’
- ECB insider: ‘We can’t just sell the bonds; it’s impossible’
- ECB insider: Could test APP roll-off at €20bn/month if markets, general economic situation permit
- ECB insider: ‘When you do QT, it is very different than when you do QE’; no symmetry
- ECB insider: Sizeable camp would like to be cautious, not commit ourselves to many things

25 November 2022

Exclusive: ECB Insider: ‘I’m Almost Sure’ That December Hike Will Be 50BP

- ECB insider: Hawks can accept slower hiking if terminal rate unaffected and progress made on QT
- ECB insider: Many Governing Council members fear hiking substantially just before a recession
- ECB insider: October’s 75bp hike was already ‘not so easy’
- ECB insider: ECB President Lagarde likely ‘senses that there is no clear consensus for 75’
- ECB insider: See risk of much more political opposition to hiking as soon as some countries enter recession
- ECB insider: Hawks will feel they must ask for 75bp hike even if they expect outcome to be 50bp

24 November 2022

Exclusive: ECB’s Holzmann: If Things Stay Unchanged Between Now and Dec 15, I Would Go for 75BP

- Holzmann: ‘If things remain unchanged from now to the decision, then I would go for 75’ bp
- Holzmann: If there were a ‘major reduction’ in HICP this month, ‘I could go along with 50’ bp
- Holzmann: No ‘major recession’ seen for now
- Holzmann: On QT, see ‘‘strong consensus that we should start small to test the markets’
- Holzmann: QT should start with APP, only involve PEPP ‘much later’
- Holzmann: Roll-off of assets acquired under the APP can overlap with rate hikes
- Holzmann: ‘Still very much concerned that a de-anchoring of inflation expectations will take place’
- Holzmann: Recent German wage agreement ‘acceptable’, but may lead companies to increase prices

21 November 2022

Exclusive: ECB’s Kazāks: ‘There is no pivot. We still say that inflation is a problem, and we will keep raising rates’

- Kazāks: ‘Discussion about the size of the step is appropriate and of course there will be one’
- Kazāks: December step size depends on economy and on whether we adjust other instruments
- Kazāks: Adjusting other instruments could improve policy transmission to all segments of economy
- Kazāks: ‘There is no need to take a pause at the turn of the year, we should continue hiking into next year’
- Kazāks: Any recession ‘likely to be relatively shallow and short-lived, and this would not lead to rate cuts’
- Kazāks: Situation ‘becoming more nuanced’, so natural that our discussions reflect greater ‘diversity of views’

7 November 2022