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ECB
Nothing new from ECB President Lagarde as she reiterates her well-known stance of apprehension when it comes to longer-term inflationary dynamics being driven by the factors that have been well-documented in recent months.
- She stressed the need to not rush into premature tightening of monetary policy (after reiterating that a '22 rate hike is "very unlikely" earlier this week, although she wouldn't be drawn into discussion re: '23 rate hikes), pointing to the requirement of durable attainment re: the ECB's inflation goal, which will be nurtured via maintaining monetary support.
- EONIA forwards have eased back from highs printed in late October, with a 10bp hike in the deposit rate not baked into EONIA forwards until somewhere between a 19- to 22-month horizon. Remember that 1-month/1-Year EONIA forwards briefly fully priced in the chances of such a move in October (on the broader major global central bank hike repricing that markets were experiencing at the time).
Fig. 1: EONIA Forward Pricing
Source: MNI - Market News/Bloomberg
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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