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ECB: Weekly ECB Speak Wrap (Nov 18 – Nov 25)

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Continued weakness in the Eurozone growth outlook, most recently highlighted by Friday’s November flash PMIs, has led to increased speculation around a more aggressive pace of ECB easing and possible guidance changes at the upcoming December meeting. 

  • Following the PMIs, the implied probability of a 50bp December cut reached a dovish extreme of almost 60%, though this has pared back to 35-40% as of Monday morning. Policymaker reactions to the PMIs have so far been quite limited, but there doesn’t yet seem to be evidence of a shift towards a 50bp cut, keeping 25bps as the base case for now.
  • Instead, we think the PMIs open up a larger possibility of a guidance tweak in December, in particular around the ECB’s pledge to keep policy restrictive. In an interview with the MNI Policy Team, the hawkish Holzmann said such a change is already being debated amongst policymakers, though he unsurprisingly prefers to keep the pledge in for now.
  • In the following PDF, we provide a summary of ECB-speak from November 18 to November 25 and summarise commentary since the October meeting by speaker and topic.

FULL PUBLICATION HERE: 241125 - Weekly ECB Speak Wrap.pdf

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Continued weakness in the Eurozone growth outlook, most recently highlighted by Friday’s November flash PMIs, has led to increased speculation around a more aggressive pace of ECB easing and possible guidance changes at the upcoming December meeting. 

  • Following the PMIs, the implied probability of a 50bp December cut reached a dovish extreme of almost 60%, though this has pared back to 35-40% as of Monday morning. Policymaker reactions to the PMIs have so far been quite limited, but there doesn’t yet seem to be evidence of a shift towards a 50bp cut, keeping 25bps as the base case for now.
  • Instead, we think the PMIs open up a larger possibility of a guidance tweak in December, in particular around the ECB’s pledge to keep policy restrictive. In an interview with the MNI Policy Team, the hawkish Holzmann said such a change is already being debated amongst policymakers, though he unsurprisingly prefers to keep the pledge in for now.
  • In the following PDF, we provide a summary of ECB-speak from November 18 to November 25 and summarise commentary since the October meeting by speaker and topic.

FULL PUBLICATION HERE: 241125 - Weekly ECB Speak Wrap.pdf