Central Bank Exclusives

ECB Brief: Holzmann Says July Governing Council Meeting Will Be ‘Most Interesting and Difficult’

- Holzmann: One purchase programme still there, scheduled to end in July
- Holzmann: Greatest concern is inflation expectations

Exclusive: More Pronounced Euro Weakness a Headache for ECB, Econostream Understands

- 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

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

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

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

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 Insight: Holzmann: Severe Scenario May Be Baseline Now; Could See HICP of 10% or Higher

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

Exclusive: ECB officials saw March HICP forecast as too optimistic, Econostream understands

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

ECB Insight: When Visco Says ECB Not Behind the Curve, Alarm Bells Should Ring

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.

ECB Insight: Subtle Signs of Inflation Pessimism from ECB President Lagarde

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.

ECB Insight: For Knot, War no Inflation Game-Changer, But One More Reason to Worry

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.

ECB Insight: Ukrainian Refugees’ Job Market Impact Seen as Limited; Consumption Effect Bigger

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.

ECB Insight: Renewal of TLTROs Still to Be Discussed, But Looking Less Likely

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.

ECB Insight: APP Could End Any Month in 3Q, Potentially Even in 2Q

By David Barwick – FRANKFURT (Econostream) – The European Central Bank’s asset purchase programme could potentially wind up ending in the second quarter, Econostream understands.

ECB Insight: Decision Not an Acceleration, 'Putin Emergency Purchase Programme' an Option if Needed

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.

ECB Insight: Council’s Decision Not to Wait Until April ‘Not Very Difficult’ Given Inflation Data

By David Barwick – FRANKFURT (Econostream) – Against the backdrop of high inflation, the European Central Bank Governing Council arrived relatively easily at an agreement this week not to wait until April to make monetary policy decisions, Econostream understands.

ECB Insight: Lagarde Denies ‘In Any Way Accelerating’ the Normalisation Process

By David Barwick – FRANKFURT (Econostream) – After only last month finally starting to take upside inflation risks as seriously as many of her European Central Bank Governing Council colleagues had taken them for some time, President Christine Lagarde made it clear on Thursday that, ‘watershed’ event or not, for now Russia’s assault on Ukraine was not going to deter the ECB from pursuing normalisation.

ECB’s Lagarde Likely to Maintain Course But Stress Optionality, Gradualism and Flexibility

ECB President Christine Lagarde is likely to maintain course towards monetary policy normalisation but to stress optionality, gradualism and flexibility

TRANSCRIPT: Interview with ECB Governing Council member Kazāks on 02 March 2022

By David Barwick – FRANKFURT (Econostream) – Following is the full transcript of the interview conducted by Econostream on March 02 with Mārtiņš Kazāks, Governor of Latvijas Banka and member of the Governing Council of the European Central Bank:

EXCLUSIVE: ECB’s Kazāks: War to Make Us More Careful, But Doesn’t Automatically Put Us on Hold

- Outlook more uncertain, war adds quite a few negatives to outlook
- Ending asset buys in Q3 still possible, but let’s assess situation first
- Must ultimately normalise monetary policy and cannot forget about this