Vasle & Holzman Comments Reflect Diverging Opinions Ahead of the September GC Meeting

Mirroring the similarly divergent opinions of recent GC speakers (Villeroy, Knot, Weidmann, Stournaras), comments from the ECB's Holzman and Vasle, which hit the wires this morning, indicate a widening rift between policymakers ahead of this week's key meeting. The comments appear to have come from EUROFI magazine, with the interviews potentially taking place some time ago. EGBs have broadly rallied following the release.

• Robert Holzman has argued that there are potential upside risks to inflation and that the ECB may be able to normalise monetary policy earlier than initially thought.
• Meanwhile, Boštjan Vasle has stated that highly accommodative monetary policy is still required and that new waves of the pandemic could slow the recovery.
• Expectations for the September GC meeting do not extend beyond a potential adjustment to the PEPP pace, and even that could turn out to be a close call.
• More fundamental questions about the future of PEPP are likely to wait until the December meeting.