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
