ECB: Hawkish Holzmann Is Open To Another Cut This Year

ECB hawk Robert Holzmann expressed an openness to cut rates once more this year in an interview with the FT (see here).

• These comments carry a little more weight than those from other ECB speakers this morning, as Holzmann is one of, if not the, most hawkish voices on the ECB Governing Council.
• Holzmann leans more towards a move in December rather than October.
• This aligns with the broader rhetoric from yesterday’s press conference, alongside source reports before and after the decision.
• In a similar vein, the hawkish-leaning Kazaks set a high bar for an October cut, noting that such a move would require a “significant economic slump”.
• Elsewhere, the centrist/dovish leaning Villeroy said that the ECB would need to be “attentive to the risk of undershooting our target as much as to the risk of overshooting it”, though still advocated a “highly pragmatic” approach to easing.
• ECB-dated OIS is little changed today, with 6bps of cuts priced through the October meeting and 37bps priced through year-end (i.e. 50% implied probability of more than one 25bp cut across October/December).