ECB Comments Highlight Guidance Challenges Beyond First Cut

This afternoon has seen ’24 ECB implied rates move higher alongside core FI yields, but today’s ECB rhetoric has not been the primary driver.

• ECB-dated OIS prices 77bps of cuts through the remainder of ’24 (vs 80bps this morning), with 21bp showing through the June meeting.
• There were limited deviations from the status quo re: a likely first rate cut in June, but differences of opinion/a lack of commitment for the policy outlook beyond the June meeting.
• The hawkish-leaning Nagel, Simkus and Kazaks were non-committal beyond the idea of a June cut (as they have been in the recent past), while Villeroy reiterated that he was open to easing at each meeting after June.
• MNI sources flagged the divisions within the Governing Council surrounding future policy rate guidance earlier this month (see here).