ECB: Weekly ECB Speak Wrap (Jan 20 – Jan 27)

The World Economic Forum in Davos brought plenty of ECB speakers but little in the way of new policy signals. Consensus amongst analysts, markets and policymakers is firmly for a 25bp cut to be delivered on Thursday (MNI’s full preview will be released tomorrow), with a subsequent 25bp cut in March also appearing very likely. 

• The January flash PMIs were stronger-than-expected, with OIS now pricing 6bps fewer cuts through 2025 than a week ago (today’s DeepSeek driven dovish repricing has been fully pared at typing). However, we note that some analysts have raised questions around the seasonality of the PMIs post-Covid, which may have biased readings higher in Q1.
• President Lagarde’s interview with CNBC at Davos stuck to familiar themes. She said that future cuts will depend on data and that "gradual" steps remain reasonable, while noting that she did not see the ECB as “behind the curve” on rate cuts. She also signalled that the debate around neutral (which she placed as between 1.75-2.25%) will start to “get a little bit hotter” soon.
• The usually hawkish Kazimir notably endorsed market pricing for “three or four cuts”, while stating that the “deal is done” on a January cut. Meanwhile, the ever-hawkish Holzmann told Kronen Zeitung that he would prefer to “wait a bit more” before cutting rates again. However, even he admitted that he could be persuaded into supporting a cut if there were “good arguments” presented.
• In the tables below, we provide a summary of ECB-speak between January 20 and January 27: 250127 - Weekly ECB Speak Wrap.pdf