Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
Further comments from ECB’s Knot are more relevant to the policy outlook. He notes that he will wait for “the full data and information set” before deciding on whether to cut rates in September, but still supports gradually easing policy should inflation return to the 2% target “at or before the end of 2025”. This aligns with his hawkish-leanings.
The end of 2025 “cutoff” for inflation to return to target has become increasingly prominent in ECB-speak over the last week. Sources pieces from Reuters and Econostream both explored the implications of the return to target slipping into 2026 in the September projections. In related reporting, sources told the MNI Policy Team that the ECB "will start discussing hard on r-star at the end of this year as a way to lay the ground for what to expect in 2025". (see image below).
While such a slippage is unlikely to derail a 25bps cut in September, it may provide a hawkish signal for market pricing further out the curve. However, it would in any case need to be weighed against the ECB’s concerns around growth, which will be working in the opposite direction (i.e. for easier policy).
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.