Exclusive News

Exclusive: ECB’s Stournaras: Misguided to Hike Rapidly at the Risk of Needing to Backtrack Soon

Exclusive: ECB’s Stournaras: Misguided to Hike Rapidly at the Risk of Needing to Backtrack Soon
- Stournaras: ‘Should err on the side of caution rather than on the side of speed’
- Stournaras: Unwarranted wage growth would justify aggressive hiking, but wage growth ‘okay’
- Stournaras: Would like monetary policy to normalise without destabilising output
- Stournaras: ‘Don’t think we’re anywhere close to actual action’ with respect to QT
- Stournaras: QT now ‘could make the situation much more difficult for the real economy’
- Stournaras: TLTRO redemptions to bring ‘a lot of shrinking’ to ECB balance sheet

31 August 2022

Exclusive: ECB Insider: ‘Very Unlikely’ That We Will Do More Than 25 Basis Points in July

- ECB insider: We committed ourselves strongly to 25 basis points in July already
- ECB insider: Still, if case is made that something changed significantly, then we could do more

15 July 2022

Exclusive: ECB Policymakers Unwavering in Support for Tighter Monetary Policy

- ECB insider: ‘Hard to imagine a substantial improvement in the inflation outlook’
- ECB insider: ‘I see only upside risks, not downside risks’
- ECB insider: ‘Might be a need for stronger action from the central bank’
- ECB insider: Could be dangerous to do less than what our HICP projections assume
- ECB insider: Stagflation ‘would still require raising interest rates anyway’

5 July 2022

TRANSCRIPT: Interview with Spanish Treasury’s Pablo de Ramón-Laca Clausen on 28 June 2022

By David Barwick – FRANKFURT (Econostream) – Following is the full transcript of the interview conducted by Econostream on June 28 with Pablo de Ramón-Laca Clausen, General Director of the Tesoro and Financial Policy, Spain’s sovereign debt issuer:

1 July 2022

EXCLUSIVE: Spain DMO Head: ‘Well enough advanced in our programme that we don’t need a fourth syndication’

- Spain DMO head: Tax revenues increasing very significantly, so funding needs declining
- Spain DMO head: Expect our greenium to settle at around three to four basis points

1 July 2022

EXCLUSIVE: Spain DMO Head: ‘No one disputes that the Eurosystem needs to hike interest rates’

- Spain DMO head: Debt sustainability not currently a problem in any Eurozone country
- Spain DMO head: Spreads ‘have to be justified by fundamentals’
- Spain DMO head: Anti-fragmentation tool will help ECB tighten policy faster, more credibly

1 July 2022

Exclusive: ECB’s Kazāks: Would Not Exclude that We Need to Take Stronger Action in July

Exclusive: ECB’s Kazāks: Would not exclude that we need to take stronger action in July
- Kazāks: ‘Fair case to discuss whether 25 basis points in July are still appropriate’
- Kazāks: ‘We should always keep the door open to discussion’ and not carve each step in stone
- Kazāks: Observing indications of expectations mounting; this could justify bigger rate steps
- Kazāks: Increased risk of nonlinearities means frontloading rate hikes would be reasonable
- Kazāks: ‘See further increases in our rates in the remaining meetings at the end of the year’

28 June 2022

TRANSCRIPT: Interview with ECB Governing Council member Kazāks on 27 June 2022

By David Barwick – FRANKFURT (Econostream) – Following is the full transcript of the interview conducted by Econostream on June 27 with Mārtiņš Kazāks, Governor of Latvijas Banka and member of the Governing Council of the European Central Bank:

28 June 2022

Exclusive: ECB Insider: When You Develop an Anti-Fragmentation Tool, It Means You’re Afraid

Exclusive: ECB Insider: When You Develop an Anti-Fragmentation Tool, It Means You’re Afraid
- ECB insider: Would be good to have an anti-fragmentation tool, but there are also risks to this
- ECB insider: Issues of communication make us ‘not that much inclined to work on that instrument’
- ECB insider: PEPP framework can always be renamed and employed as an anti-fragmentation tool

15 June 2022

Exclusive: QT Not a ‘Current Issue’ as ECB Starts Hiking, But Need to Prepare Already Talked About

- ECB insider: ‘There are views that we need to start more general discussions’ about QT
- ECB insider: ‘Time to start talking now for [QT] decisions to be ready sometime later in the future’

13 June 2022

Exclusive: ECB Governing Council Discussed Neither the Neutral Rate nor the Terminal Rate

- ECB insider: ‘One day we will approach’ topic of neutral rate, but now dealing with hiking
- ECB insider: ‘Very broad and diverging views’ on where neutral rate stands
- ECB insider: Lagarde said, ‘We may have different views, but today we need to take a decision’

13 June 2022

Exclusive: ECB Very Likely to Hike by 25bp in July, But More Not Absolutely Impossible

- ECB insider: ‘Very high probability it’s going to be 25 basis points’ in July
- ECB insider: If inflation expectations de-anchored, ‘would we stick to 25? I don’t think so’

10 June 2022

Exclusive: Many ECB Insiders Still Undecided, But Clear Potential for Compromise Involving 50 Bps

- 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

6 June 2022

Exclusive: ECB Resigned to Euro Weakness Versus Dollar, say Insiders

- 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’

30 May 2022

Exclusive: Permanent Anti-Fragmentation Tool Not Seen as Essential by Most ECB Insiders

- 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

27 May 2022

Exclusive: ECB Still Likely Far from Ready to Discuss QT, But Topic Could Come up Sooner Than Expected

- 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

26 May 2022

Exclusive: Symmetrical Distribution of Key ECB Rates Optimal, But No Urgency Seen

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’

20 May 2022

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

29 April 2022

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’

28 April 2022

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

21 April 2022