ECB's Lane: We are not at the lower bound in terms of rates

ECB chief economist, Philip Lane, speaks in an interview with the FT

• We could still lower the deposit rate if needed
• The market does not think we are going to raise rates in 2-3 years
• There is room for that through forward guidance
• We need to make sure yield curves don't move ahead of the economy
• Full interview (may be gated)

There isn't much that hasn't already been said through the ECB policy statement last week and via Lagarde's press conference at the time as well.

The ECB is putting a lot of emphasis on "favourable financing conditions" but there is a vague room for what that entails, as they are mostly viewing that in terms of how the bond market is shaping up to be in recent weeks.

As for the headline comment, I don't see them exploring another rate cut and this is more of a verbal threat so as to try and keep the market in-check. Otherwise, they will just stick with tweaking PEPP until they are pushed to the brink.