STIR: Year-end ECB Implied Rates Largely Look Through Source Report

Steady/hawkish leaning trade in year-end ECB implied rates so far Thursday, with more focus paid to the Swiss short-end (see above) given few fresh signals this morning. 

• ECBspeak has been relatively sparse this week, with Holzmann and Nagel presenting unsurprisingly cautious views and Lagarde re-iterating the message from the January decision. Generally, there has been little meaningful pushback against current market pricing, which assigns a ~75% implied probability of 3x25bp cuts across the next three decisions.
• Dec ’25 ECB-dated OIS is just 0.5bps more hawkish from the open (76.5bps of cumulative easing priced) and are looking through an ECB sources report, which looks at possible wording tweaks to the March policy statement - suggesting the March policy statement could modify language around policy being restrictive by adding a qualifier (e.g. “less” or “mildly”), or remove the reference to “restrictive” altogether.
• MNI’s ECB sources piece posted on February 4th suggested the ECB is likely to adjust its reference to policy restrictiveness in its next statement in March, but there would be resistance on the Governing Council to completely removing it, as estimates of the neutral rate edge downwards but remain uncertain.