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Nord LB Still See H1’24 Rate Cuts as Unlikely, Sees PEPP as Key Topic for Press Conference

ECB
  • Nord LB write that all parameters underpin the fact that key interest rates will remain unchanged today. They flag three relevant topics of interest specifically: What will happen with the PEPP? Will balance sheet reduction be accelerated by an earlier end to full PEPP reinvestments? How and when does the ECB dare to approach the minimum reserve requirement?
  • On the decision itself, they assume that the ECB will extend the pause and believe there will be no further hike. The meetings will therefore remain databased, so as not to be "data-driven".
  • On inflation expectations, they expect the HICP to be close to 2%. Much more important, however, will be whether there will still be a "3" in front of the decimal point for 2024. If this were the case, they believe that this would clearly put an end to interest rate cut fantasies as early as Q1/2024.
  • They are sticking to their forecast that there is unlikely to be an interest rate cut in H1/2024. All the more reason to focus on three issues: PEPP, QT and minimum reserve.
  • They therefore expect that there will be a stronger focus on the PEPP and the constantly postulated "first line of defence" both in internal discussions and at the press conference. They see the ECB favouring a meeting-by-meeting approach instead of forward guidance on the interest rate side.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
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MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
EM BulletHomepagemarkets-real-timeEmerging Market NewsBulletMarketsFixed Income BulletsForeign Exchange BulletsEuropean Central Bank (ECB) Market News

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