Insights

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.

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.

ECB Insight: Only a Question of Time Before Someone at the ECB Suggested 50 Bps Publicly

By David Barwick – FRANKFURT (Econostream) – It was only ever a matter of time before someone from the European Central Bank’s Governing Council publicly floated the potential need for the ECB to consider an outsized interest rate step. That Klaas Knot took it upon himself to do so is no shocker.

ECB Insight: Convergence of Council to Smooth Road to Major Decisions, at Least for the Moment

By David Barwick – FRANKFURT (Econostream) – In the context of the ongoing communications blitz being waged by members of the European Central Bank’s Governing Council, the convergence of views is hard to overlook and important not to underestimate.

ECB Insight: Lagarde Seems to Confirm That Rate Hike Apt to Follow Net Purchases Quickly

By David Barwick – LJUBLJANA (Econostream) – European Central Bank President Christine Lagarde suggested on Wednesday that the ‘some time after’ of the ECB’s forward guidance needed to be defined with precision, but on balance probably just wanted to emphasise the potential imminence of a rate hike once net asset purchases end.

ECB Insight: Net Asset Purchases Likelier to End in June, With Early July Probably Option Two

By David Barwick – FRANKFURT (Econostream) – We wrote yesterday that we consider a June end to the European Central Bank’s net asset purchases probable, without ruling out the beginning of July. In the interim, we have grown more confident that these are in fact the choices, and prefer the former.

ECB Insight: Lagarde Avoids Stoking Expectations, But Makes Little Effort to Dampen Them

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Saturday steered clear of offering financial markets much new in the way of guidance about the timing with which monetary accommodation would be withdrawn, but neither was she keen to dampen expectations, and her comments on the economy suggested a degree of confidence.

ECB Insight: Elderson Confirms 50-Bps to Be Discussed, Avoids Revealing Own View

By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Frank Elderson on Friday confirmed that a 50-bps rate hike will be on the ECB’s agenda shortly, but gave no indication as to whether he supported a policy move of that size.

ECB Insight: Amid Growing Concern About Inflation, a New Panetta is Forced to Emerge

By David Barwick – FRANKFURT (Econostream) – What a change a few weeks can make. On Thursday, European Central Bank Executive Board member Fabio Panetta made substantive comments about the proper course for monetary policy that to some extent could have been uttered by a relatively hawkish member of the ECB’s Governing Council.

ECB Insight: Schnabel Ready to Hike in July After Ending Net Asset Purchases in June

By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Isabel Schnabel on Tuesday presented a strong case for taking policy action relatively soon, suggesting in particular that net asset purchases could end in June with a first rate hike the following month.

ECB Hawk-Dove Ranking: At Long Last, Governing Council as a Whole Enters Hawkish Territory

ECB Insight: de Guindos Makes July Lift-Off Sound No Less Likely Than It Was, Perhaps Even More

By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Sunday reinforced the notion that the ECB could hike rates as soon as July, all while somewhat perfunctorily assuring that the precise date was no foregone conclusion.

ECB Insight: With Policy Tightening Looming Ever Larger, Super-Dove Visco Mounts a Last Stand

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Ignazio Visco on Thursday appeared torn between alternately conceding the inevitability of tighter monetary policy and staving it off.

ECB Insight: Kazāks Gets Behind a July Lift-Off as a ‘Better Option’ than September

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Mārtiņš Kazāks on Tuesday positioned himself in favour of a July rate hike rather than for the next-best option of a September lift-off.

ECB Insight: ECB Ready to Handle Potentially Large TLTRO Repayment End-June

By David Barwick – FRANKFURT (Econostream) – The European Central Bank is ready to deal with the possibility of an outsized repayment two months from now of funding provided banks under the ECB’s targeted longer-term refinancing operations (TLTROs), Econostream understands.

ECB Insight: Lagarde Treads Carefully, But Renews Stress on Continued Normalisation

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Thursday took care not to show much bias in any direction, but as in March, the message came though nonetheless that Russia’s campaign of aggression against Ukraine was not standing in the way of the ECB's monetary policy normalisation.

ECB Insight: An End to Russia’s War on Ukraine Might Make Little Difference for Monetary Policy

By David Barwick – FRANKFURT (Econostream) – If Russia’s unjustified war of aggression against Ukraine were to come to an end soon, Europe would breathe a collective sigh of relief at the halting of bloodshed, but European central bankers would not necessarily see a major impact on monetary policy, Econostream understands.

ECB Has Much to Debate, But Lagarde May Have Much Less to Communicate

By David Barwick – FRANKFURT (Econostream) – The April monetary policy meeting of the European Central Bank’s Governing Council is set to be the scene of particularly interesting deliberations to which the subsequent communication by ECB President Christine Lagarde may not live up, given the likely absence of any major decisions and a clear preference for leaving options open.

ECB Insight: Amid the Clamour of ECB Hawks, a Dovish Trio Exploits the Quiet Period to Be Heard

By David Barwick – FRANKFURT (Econostream) – As if to counter the growing perception that tighter European Central Bank monetary policy has become a juggernaut, three Governing Council members on Friday bent the rules of the ECB’s so-called quiet period somewhat in a demonstration of unified reluctance to endorse the dominant trend.

ECB Insight: Panetta Still No Fan of Normalisation, But No Longer Quite as Bent on Thwarting It

By David Barwick – FRANKFURT (Econostream) – European Central Bank Executive Board member Fabio Panetta on Wednesday recited his most current litany of reasons why monetary policy tightening shouldn’t be necessary, but his opposition seemed to have weakened and his previous downplaying of high inflation to have given way to a less categorical view.