MNI BRIEF: ECB Felt Premature Discussing Landing Zone-Accounts
MNI (LONDON) - The European Central Bank saw discussions over a possible landing zone for interest rates as premature and at January's Governing Council meeting it was "widely felt that even with the current deposit facility rate, it was relatively safe to make the assessment that monetary policy was still restrictive,” meeting accounts published Thursday showed. (see MNI SOURCES: ECB To Revise 2025 Inflation Slightly Higher )
However, the view was expressed in the meeting by at least one attendee that the neutral rate was likely higher than before the pandemic and that with “a further reduction in policy rates at the present meeting, rates would plausibly be getting close to neutral rate territory” and might no longer be restrictive.
The ECB admits that the debate about the neutral rate among market analysts was becoming more intense but saw that it is “misleading” to try to transport the GC assessment on that as a proxy for the terminal rate.