ECBs Villeroy: We should and can avoid recession. They soft landing path is more likely

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

This article was written by Greg Michalowski at Source