ING | The ECB is weighing sticky inflation and wages with a softening growth outlook, French political turmoil, and more dovish Fed expectations. Cutting again this week is out of the question, and giving new rate guidance is probably an undesirable path too. Once again, less is more in ECB communication, and the impact on rates and FX should be limited As discussed in our full European Central Bank preview,…
Banca March: Christine Lagarde opens the ECB’s annual forum in Sintra, warning that “the soft landing of the economy is not yet guaranteed”. The head of the monetary authority has asked for more time to make sure that the risks that could push inflation above the 2% target have passed, indicating that the strength of the labour market gives them some room to gather more information, stressing the message of…
BancaMarch: ECB Executive Board member Isabel Schnabel has said that the threat of potential price shocks makes it impossible to commit to a fixed path for the level of interest rates. The monetary authority expects a process with ups and downs in price changes, although Schnabel said that recent progress points in the right direction. She added that now that inflation is easing, wage growth is gradually declining and there…
Martin Wolburg (Generali AM) | Markets remain concerned in the home stretch of the fight against inflation that central banks should only reluctantly ease rates. Recently, ECB Governing Council members such as Schnabel and de Guindos warned about wage growth developments as an upside risk to inflation. Last week, German official wage data for the first quarter (+6.2% year-on-year) pointed in that direction and, at the eurozone level, negotiated first…
Link Securities| In an interview for the US portal CNBC, ECB President Lagarde said yesterday that the central bank is still on track to cut interest rates in the short term, subject to any major shocks. She said they are observing a disinflationary process that is proceeding in line with their expectations. He added that they just need to build a little more confidence in this disinflationary process, but if…
Mirabaud: To no one’s surprise, the European Central Bank (ECB) has decided to keep official interest rates unchanged and has sent out a clearly pessimistic message. Inflation is expected to fall more than expected – it may not even reach 2% in 2026 – and economic growth is expected to be very limited: according to the latest ECB forecasts, gross domestic product (GDP) will grow by barely 0.6% this year….
Banca March| After years in which the monetary authority has been in charge of acquiring the debt of member countries and fiscal rules were frozen, the flexibility granted to fiscal policies must now be limited in order to contribute to lowering inflation and debt ratios. This has been repeatedly conveyed by the President and the Vice-President. However, she pointed out that the reduction of public deficits should be carried out…
Banca March| Christine Lagarde has spoken out on independence and investment strategies in the eurozone. On the one hand, she stressed the need to be more self-sufficient in energy, by boosting investment in renewable energies such as green hydrogen and a smart grid system. The leader of the ECB provided numbers that would favour greater progress: 620,000 million euros per year in climate objectives and 125,000 million in the digital…
Banca March: The monetary authority presented total losses of €7.9 billion in 2023, which, offset by the €6.6 billion of accumulated provisions in recent years, have resulted in this loss of €1.3 billion in profits. The reason for these results is due to the rise in interest rates, which has increased the payment to the national central banks. In fact, the net interest expense has risen from €900 million in…
Peter Goves (MFS Investment) | As widely expected, the ECB kept all three of its policy rates on hold at the January meeting. The deposit rate therefore remains at 4% and it has been held at this rate since September 2023. We would agree that the longer rates are held at such restrictive levels, domestic demand will remain subdued and (core) inflation will continue to fall. Today’s meeting affirms our…