ECB's Knot
- We have to see how wages data develops, will see data around the middle of 2024
- Optimal path for rates closer to market pricing at cut-off date than now
- Any structural bond portfolio should be as small as possible
The market is pricing in a 50/50 probability of a cut in March with 100 bps of cuts priced in for the July meeting.
Ultimately, the market is saying that the ECB will decide that it can ease a bit without getting too loose and the market is saying that eurozone data is going to crumble.
