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Terminal Rate Dips From New Cycle High After Villeroy Comments

ECB

Villeroy's comments this morning on the monetary policy outlook are unsurprisingly basically the same as from last Friday 17th, which were seen as implying support for a slowdown to a 25bp hike pace after the expected March 50bp takes the deposit rate to 3.00%.

  • The more notable comment today is that markets have overreacted since last Thursday.
  • Markets priced a 3.68% terminal deposit rate at end-Thursday 16th - that rose to a new cycle high of 3.80% prior to the Villeroy headlines this morning, but have retraced to just below 3.75% (by Sept).

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