- 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 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 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
- 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
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’
- Holzmann: One purchase programme still there, scheduled to end in July
- Holzmann: Greatest concern is inflation expectations
- ECB insider: Higher depreciation of euro can affect HICP projection at end of horizon
- ECB insider: Agree with Klaas Knot that we should counter continued euro depreciation
- ECB insider: ‘Sudden [exchange rate] shifts need to be taken into account’
Exclusive: 50-bp Rate Hike Not ECB Baseline for Now, But Council Will Have to Discuss
- ECB insider: Some hawks will push for 50-bp hike to get away from negative rates
- ECB insider: Expect spread between DFR and MRO to be narrowed during normalisation
Exclusive: ECB Anti-Spreads Programme to Face Bumpy Path, Econostream Understands
- ECB insider: Permanent mechanism would call EMU’s institutional set-up into question
- ECB insider: Permanent, unconditional facility would amount to transfer union via backdoor
- ECB insider: Facility limited to targeting temporary crisis situations more likely outcome
Exclusive: ECB’s Net Asset Purchases Most Likely to End in July, Official Says
- Official: optionality of September rate hike still open; decision in June at the latest
- Official: inflation showing up in wages is still ‘the missing link at the moment’
Exclusive: ECB Touts ‘Gradualism’ to Keep Markets Calm, But Data Will Set the Pace, Econostream Understands
- Official: Some countries still extremely fragile with respect to financial market conditions
- Official: Gradualism needed to make sure that we don’t see market overreaction coming
ECB’s Holzmann: Severe Scenario May Be Baseline Now; Could See HICP of 10% or Higher
- Worries inflation of 10% and higher could be coming, with output stagnant or negative
- Suggests that much depends on Chinese willingness to help resolve war
- Initial signs that inflation expectations may be rising
ECB officials saw March HICP forecast as too optimistic, Econostream understands
- Official: Clear already during the meeting that the baseline scenario is too optimistic
- Official: We’re now in one of the other more negative scenarios, not the baseline
By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Ignazio Visco on Thursday said that the ECB was not behind the curve. Coming from him, the ECB might want to reconsider whether it is at heightened risk of this happening.
18 March 2022
By David Barwick – FRANKFURT (Econostream) – A close look at European Central Bank President Christine Lagarde’s comments on Thursday suggests, albeit subtly, somewhat more pessimism about inflation than just a week previously.
17 March 2022
By David Barwick – FRANKFURT (Econostream) – Russia’s invasion of Ukraine is no reason to think medium-term inflation prospects in the euro area have become less worrisome, European Central Bank Governing Council member Klaas Knot implicitly suggested on Thursday.
17 March 2022
By David Barwick – FRANKFURT (Econostream) – Some 2.5 million Ukrainian refugees have entered the EU in the last few weeks as a result of Russian military aggression, but this is so far seen by the ECB as being of limited relevance for labour market developments, Econostream understands.
15 March 2022
By David Barwick – FRANKFURT (Econostream) – The days of the targeted longer-term refinancing operations (TLTROs) of the European Central Bank seem likely to be numbered, Econostream understands.
14 March 2022
By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s asset purchase programme could potentially wind up ending in the second quarter, Econostream understands.
11 March 2022
By David Barwick – FRANKFURT (Econostream) – The European Central Bank Governing Council’s decision on Thursday should be understood less as an acceleration than as a logical response to an array of macroeconomic factors inconsistent with the present policy stance, in the view of one insider who spoke to Econostream.
11 March 2022