ECB's Villeroy
ECB's Villeroy

ECB Villeroy on the economy and central bank policy:

  • Our reliance on forward guidance was excessive, we should be more modest with future guidance.
  • We should expect more bond volatility, renewed increases would be another reason not to hike rates.
  • We have to discontinue our PEPP reinvestments in due time, and possibly earlier then the end of 2024.
  • On our inflation target, I am not fixated on 2% to the nearest decimal place.
  • The latest developments in Israel and the oil market shouldn't significantly change downward inflation trend.
  • We should and can avoid recession, a soft landing path is more likely.
  • The question to quickly shifted from "When will we stop hiking?" to "When will we start cutting?"
  • See rates plateauing for at least the next several meetings and the next few quarters.

ECB Villeroy putting the kibosh on rate cut expectations