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ECB Insight: Schnabel Hawkish on Growth, Inflation; Sceptical of Asset Buys’ Cost-Benefit Ratio

By David Barwick – FRANKFURT (Econostream) – Today’s interview by the European Central Bank’s Isabel Schnabel offered a broad and insightful view of how the most hawkish member of the Executive Board sees various key aspects of monetary policy just three weeks before one of the most important recent meetings of the Governing Council.

ECB Insight: Post-PEPP APP Purchases of Greece’s Sovereign Debt a Very Open Question

- ECB insider: Council will be divided, there will be quite substantial opposition
- ECB insider: Can’t put everything on monpol’s shoulders with no-monetary-financing clause

ECB’s Villeroy: Should Keep as Much PEPP Flexibility as Possible

By David Barwick – FRANKFURT (Econostream) – The European Central Bank should preserve as much as possible of the flexibility of its pandemic emergency purchase programme (PEPP) after the PEPP ends in March, Governing Council member François Villeroy de Galhau said Monday.

German Bundesbank Sees German Economy Treading Water in 3Q, Inflation over 3% for Some Time

By David Barwick – FRANKFURT (Econostream) – The German economy is likely to put growth on hold for the moment, while consumer price inflation would remain above 3% for months to come, the German Bundesbank said on Monday in its latest monthly report.

ECB Insight: Lagarde Speech Strikes New, More Optimistic Inflation Tone

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde on Friday warned of the negative growth impact from the developments driving high inflation, but the clearly more important takeaway was her new optimism about the possibility of inflation eventually getting to the point where the ECB could start raising interest rates.

EXCLUSIVE: Sweden NDO Head of Funding: Reduced Issuance to Hamper Liquidity

By David Barwick – Frankfurt (Econostream) – The Swedish National Debt Office accepts that with the government expecting a budget surplus in each of the next two years, its reduced debt issuance will contribute to less liquidity, according to Johan Bergström, Head of Funding at the NDO.

ECB’s Weidmann: Inflation May Not Fall Below Target over Medium Term

By David Barwick – FRANKFURT (Econostream) – Risks to inflation are tilted to the upside, European Central Bank Governing Council member Jens Weidmann said Wednesday.

ECB Insight: Uncertainty About Inflation Outlook Leaves ECB Insiders Wondering, Too

By David Barwick – FRANKFURT (Econostream) – The crucial element of next month’s monetary policy meeting of the European Central Bank Governing Council is the inflation outlook. As Eurosystem staff gear up to make their best guesstimate amid great uncertainty, various insiders shared with Econostream reasonably similar, though still quite tentative views about medium-term prospects for price pressures in the area.

ECB Hawk-Dove Ranking: Holzmann Joins Weidmann and Knot at Hawkish End of Spectrum

ECB Insight: Holzmann Wages Lonely War on QE, but ECB Bank Credit Also Comes in for Beating

By David Barwick – FRANKFURT (Econostream) – Though there are certainly others on the European Central Bank Governing Council who are sceptical about some of what the ECB is doing, Council member Robert Holzmann seems highly unlikely at this juncture to be joined by anyone in his campaign to put an end to all quantitative easing.

ECB’s Holzmann: 'Long Story Short, This Quantitative Easing Has to Stop'

- ECB banking system credit ‘a great deal of money with very, very market-distorting effects’ 
- The pandemic, ‘economically speaking, is over’
- See inflation plateauing rather than coming back down quickly
- Dovish Bundesbank president would be ‘somewhat problematic’

ECB: Macroprudential Policy Limits Can Increase Need for Aggressive Monetary Accommodation

By David Barwick – FRANKFURT (Econostream) – Limitations in the current macroprudential policy framework can make forceful monetary policy accommodation more necessary, the European Central Bank said on Wednesday.

ECB Hawk-Dove Ranking: Wunsch Formally Enters Hawkish Territory

- Wunsch: ‘I’m being perceived as someone who changed camps’

ECB’s Schnabel: Must Be Patient, But Also Watch Upside Inflation Risks

By David Barwick – FRANKFURT (Econostream) – Monetary policymakers have to be patient in the face of possibly only temporarily high inflation, but at the same time be attentive to upside risks, European Central Bank Executive Board member Isabel Schnabel said Wednesday.

EXCLUSIVE: ECB’s Wunsch: We Must Recognise That the World Has Changed in the Last Three Months

- 2023 HICP forecast likely below 2%, but realised outcome could easily be at 2%
- Must be patient, but can’t exclude that inflationary forces are quite strong and at some point require reaction
- Should recognise that our models risk underpredicting inflationary pressures
- ECB faced with ‘now-or-never’ moment; ‘this is a huge opportunity to re-anchor to 2%’

ECB Insight: de Guindos Suggests Exit from Crisis Slowed by Shortages

By David Barwick – FRANKFURT (Econostream) – European Central Bank Vice President Luis de Guindos on Monday appeared to be claiming that shortages affecting economic activity were in effect hampering the euro area’s exit from the crisis.

ECB Insight: TLTROs More Likely to Be Extended Than Not, ECB Insiders Indicate

By David Barwick – FRANKFURT (Econostream) – A growing market perception that the European Central Bank is likely to continue offering targeted longer-term refinancing operations (TLTROs) on somewhat less advantageous terms in a post-pandemic world stands a decent chance of becoming reality, Econostream believes.

ECB Insight: Lagarde Repeats Rate Hike Unlikely in 2022, Passes When Asked About 2023

By David Barwick – FRANKFURT (Econostream) – European Central Bank President Christine Lagarde’s rejection on Monday of the idea that she had not countered market rate expectations with much strength neatly underscored the true motive for what was indeed the weakness of that pushback.

ECB: Still a Risk of Long-Term Output Scarring from the Pandemic

By David Barwick – FRANKFURT (Econostream) – The duration of the pandemic’s negative impact on potential output remains uncertain and long-term scarring is still possible, the European Central Bank said on Wednesday.

ECB’s Schnabel: PEPP’s End ‘Can Be Expected’ in March; APP Hinges on Inflation Outlook

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s pandemic emergency purchase programme (PEPP) is likely to end next March, while what happens to asset purchases under the asset purchase programme (APP) hinges on medium-term inflation prospects, ECB Executive Board member Isabel Schnabel said Tuesday.