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Villeroy: ECB Should Get To Neutral Rate Then Assess

ECB

*VILLEROY: ECB SHOULD GET TO NEUTRAL RATE, THEN ASSESS - bbg

*VILLEROY: ECB NORMALIZATION DOESN'T WEIGH ON ACTIVITY - bbg

*VILLEROY: MORTGAGE CONDITIONS STILL VERY FAVORABLE IN FRANCE - bbg

  • Follows comments from Sep 14 that he sees a neutral rate below or close to 2% in the EA, with the possibility the ECB could be at neutral by year-end, and tightening only beginning once above neutral if needed.
  • ECB-dated OIS currently shows a 72bp hike priced for the Oct 27 meeting and a cumulative 137bps to 2.03% for Dec 15. Contrary to any sort of assessment/pause, OIS prices rates going above 3% by Jun'23.

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