ECB night

ECB considers raising banks’ reserve requirement from 1% ($170bn) to 3-4% to reduce excess liquidity ($3.6bn).

As the risk of stagflation scenarios gains momentum, ideas to cut excess liquidity (close to €3.5trn) and the costly size of the ECB’s huge balance sheet are re-emerging. And the problem for credit markets, and especially peripheral ones, is that the ECB may already be looking for alternatives. According to Reuters, the ECB is discussing the option of accelerating the end of the Pandemic Emergency Purchase Programme (PEPP) from early…

BCE Sept 2023 4

ECB raises rates for tenth time in a row: 25 basis points to 4.50%, highest level in 20 years

CdM| The market had given a 70% probability that the ECB would raise +25 bps at yesterday’s meeting, and it happened. The Governing Council of the European Central Bank (ECB) decided to raise interest rates by 25 basis points, so that the reference rate for its refinancing operations will stand at 4.50%, while the deposit rate will reach 4% and the lending rate will be 4.75%. With this tenth consecutive…

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ECB announces decision to hike policy rates by 25bp

Peter Goves (MFS Investment) | Although the ECB didn’t quite explicitly say “we are at peak”, the change in guidance effectively points in that direction in our view. We likely have rates on hold ahead of us now as opposed to ongoing hikes in our view. In other words, unless there is a decisive change in prevailing data trends, we think the ECB is more or less done. The focus…

ECB night

ECB forgoes stabilising inflation before 2025 to avoid damaging economy

Minutes of the last monetary policy meeting. The ECB council considers that restoring price stability before that date would “depress economic activity to an unnecessary level”. Inflation has become a burden for the euro area and, in general, for all regions of the world. Central banks are fighting with all their might to try to regain the price stability dictated by their mandate, but some are already beginning to do…

ECB Bundesbank

ECB to inform Italy concerning dangers of bank windfall profits tax

Norbolsa| The ECB is preparing to send a letter to Italy with objections concerning the windfall profits tax, since, according to sources, the tax was announced without first informing the Bank of Italy or the ECB, as they are supposed to do according to EU rules. In this letter, the monetary authority will report on the dangers that this tax may have for the Italian economy.

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ECB’s tight monetary policy starts to bite with corporate credit at record lows

Link Securities| According to the European Central Bank’s (ECB) bank lending survey published on Tuesday, 2Q2023 saw a record fall in demand for corporate loans to its lowest level since the survey began in 2003. According to banks in the region, credit conditions tightened more than expected in the quarter under review. Banks also tightened conditions and terms further in 2Q2023 The survey also reported that the net tightening since…

lagarde sintra 2023 copia

Lagarde confirms in Sintra that ECB will continue to raise rates at upcoming meetings

Link Securities | According to on Tuesday, the president of the European Central Bank (ECB), Christine Lagarde, said in her opening speech at the central bank forum in Sintra (Portugal) that the ECB will probably not be able to declare the end of its historic cycle of interest rate hikes any time soon. In that sense, Lagarde said that it is unlikely that in the near future the central…

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ECB: market gives 100% probability of another rate hike in July

Banca March: The ECB followed the script and at Thursday’s meeting increased the price of money once again, raising all its interest rates by 25 b.p., bringing the benchmark rate to 4% and the deposit rate to 3.5%. However, the most relevant aspect was economic expectations and clues as to the monetary authority’s future moves. In these sections, it should be noted that the ECB lowered its GDP growth forecasts…

Christine Lagarde IMF director

ECB hikes 25bp at its June meeting, deposit rate now at 3.50%

Peter Goves (MFS) | This was as guided at the last meeting and is largely due to inflation projections being “too high for too long”. On QT, the policy was extended (again, as widely telegraphed) across all APP from July 2023. EGB spreads remain relatively tight and continue to exhibit relatively low volatility. There were minor changes to the forecasts which show medium term inflation at 2.2% (in 2025, +0.1ppt)….

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ECB faces dilemma as inflationary pressures remain at high levels

Jeremy Cunningham, Investment Director, Fixed Income at Capital Group| The European Central Bank (ECB) will face an even more challenging policy environment in 2023. Core inflation appears to have already peaked in the major European economies and should continue to fall as the effects of last year’s sharp increases in energy prices fade. However, underlying inflationary pressures are rising. Higher energy prices are being passed through to a wide range…