Scicluna the Dovish Outlier, Pricing Roughly In Line With MNI's Latest Source Report

We have covered the latest EUR STIR market pricing in detail elsewhere, but we stress that late Thursday comments from ECB Governing Council member Scicluna (open to the idea of a March cut given broader trends in inflation) provide an outlier vs. the central ECB view.

• Recent ECB speak has generally pushed back on the need for haste when it comes to implementing a rate cutting cycle.
• Still, we do note that centrist/semi-influential GC member Villeroy has stressed that the risk of cutting rates too late is at least equal to the risk of moving too early.
• A reminder that our latest ECB sources piece (published yesterday) noted that Governing Council expectations “for rate cuts this year currently range between 50 and 100 basis points in 25bp steps, with more dovish members looking for an earlier start but the largest bloc coalescing around a June commencement for easing and then lowering the deposit rate twice more.”
• ’24 cut pricing on the ECB-dated OIS strip is still slightly more aggressive than this but has generally moved closer in line with that view through the early part of this year:
• ~11bp of cuts are seen through the April gathering, with ~33bp cuts priced through the May meeting.
• ~110bp of '24 cuts are showing at present, although that has moderated from the 165-170bp that was priced in late ’23.
• Well-documented external factors have had a notable impact, but the importance/focus on Eurozone wage data remains evident.