ECB Hawks Push Back Against Idea Of Near-Dated Cuts, Question Terminal Levels

ECB-dated OIS is little changed to a touch firmer on the day, with the ECB-dated OIS strip indicating ~7.5bp of further tightening for the current cycle (through January) before ~32bp of cuts are seen through June ’24.

• The general direction of travel for core FI markets and ECB speak has provided the impetus for the move.
• Weekend comments from various ECB Governing Council members pushed back against the idea of near-dated rate cuts, while some more hawkish comments (Holzmann & Kazimir) stressed that we may not have reached terminal rate levels.
• Elsewhere, Greek CB chief Stournaras urged governments to do more in the fight against inflation, while ECB Vice President de Guindos noted that the worst of the underlying inflation problem had passed, although pointed to continued uncertainty and the delayed impact of already delivered tightening.
• Finally, the Vice Governor of the Portuguese central bank suggested that the ECB may reach its 2% inflation goal quicker than is forecast owing to the fragile state of the European economy.
• We also note that a RTRS sources piece released over the weekend suggested that ECB President Lagarde “seized the mobile phones of her fellow policymakers at this week's meeting and rebuked them for leaking crucial information ahead of a policy decision.”