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☆ Italy's Visco raps ECB colleagues in widening hawk-dove divide
▼ + stars: | 2023-03-08 | by ( Gavin Jones | ) www.reuters.com time to read: +2 min

ROME, March 8 (Reuters) - European Central Bank governing council member Ignazio Visco on Wednesday criticized some fellow policymakers for comments on future interest rates that diverged from what had been agreed at ECB meetings. "For this reason I don't appreciate comments by my colleagues regarding future and prolonged increases in rates," Visco added, in unusually blunt remarks that highlight a widening rift at the Frankfurt-based ECB. Visco said that while the ECB had managed to stabilise inflation expectations, geopolitical uncertainties meant economic developments were hard to predict. Other governing council members, considered policy hawks who attach overriding importance to curbing inflation even if it means hurting growth and employment, have gone further. The ECB has no policy meeting in April.

☆ ECB confronts a cold reality: companies are cashing in on inflation
▼ + stars: | 2023-03-02 | by ( Francesco Canepa | ) www.reuters.com time to read: +9 min

"It's clear that profit expansion has played a larger role in the European inflation story in the last six months or so," said Paul Donovan, chief economist at UBS Global Wealth Management. "The ECB has failed to justify what it's doing in the context of a more profit-focused inflation story." Instead, national accounts and earnings reports from listed companies are being used as proxies to paint the inflation picture. "The main story of the risks going forward is still that there's a looming wage-price spiral which should make the central bank even more aggressive in hiking interest rates." loadingloadingEven inside the ECB, labour representatives demanding higher pay for central bank staff have distanced themselves from what they described as the institution's "anti-worker bias".

"Markets are priced for perfection," Schnabel, the head of the ECB's market operations, told Bloomberg. Money markets now show investors betting on a peak ECB rate at around 3.75% by late summer, up from levels around 3.4% earlier this month, as a string of hawkish ECB comments in recent days unwound earlier bets. He and fellow board member Fabio Panetta said the impact of many of the ECB's rate hikes so far had yet to be felt by the economy, with the latter calling for "small steps" going forward. The ECB raised rates by 50 basis points this month and pre-announced another increase of the same size for March 16. But it kept an open mind about future moves, with most policymakers expecting another rate hike in May.

☆ Factbox: Key ECB policymaker comments since Feb rate hike
▼ + stars: | 2023-02-17 | by ( ) www.reuters.com time to read: +4 min

By smoothing our policy rate hikes – that is, moving in small steps – we can ensure that we calibrate (policy) more precisely. Boris Vujcic, Croatian central bank governor, Feb. 10"I would agree that we are likely to see more rate action beyond March." Joachim Nagel, German central bank chief, Feb. 7"From where I stand today we need further, significant rate hikes." Pierre Wunsch, Belgian central bank chief, Feb. 3"I don’t think we're going to move from 50 basis points (in March) to zero. Gediminas Simkus, Lithuanian central bank chief, Feb. 3"The March rate hike is not the last one.

☆ ECB's Panetta calls for small rate hikes as inflation falls
▼ + stars: | 2023-02-16 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 16 (Reuters) - The European Central bank should start raising its interest rates in smaller increments and avoid committing to future moves as inflation in the euro zone falls, ECB board member Fabio Panetta said on Thursday. "With rates now moving into restrictive territory, it is the extent and duration of monetary policy restriction that matters," Panetta told an event in London. Financial markets expect the ECB to increase the rate it pays on bank deposits to at least 3.5% by the summer, from 2.5% currently. Panetta also predicted that core inflation, which has become the key variable in the ECB's debate, "would eventually follow" headline inflation in falling and there was no evidence of price expectations getting out of control despite rising wages. He also called for a "a measured approach" to the ECB's unwinding of its bond holdings, which Knot and Nagel, among others, want to accelerate.

☆ Morning Bid: Growth trumps rates
▼ + stars: | 2023-02-16 | by ( ) www.reuters.com time to read: +6 min

While there were some questions about seasonal adjustments in the data, economists were impressed that sales growth was pretty broad based and have scrambled to re-crunch first quarter U.S. output forecasts as a result. There may be a more mixed picture from Thursday's data slate on producer prices, housing starts and weekly jobless claims. Even though rates futures and Treasury yields ticked back a bit today, pricing now has Fed policy rates moving as high as 5.25% and staying above 5% all year. And while full-year earnings growth estimates for S&P500 companies have sunk to zero, consensus forecasts are now pencilling in a rebound of almost 12% next year. Uncertainty about the pace of growth and annual tax receipts in April makes it difficult for government officials to predict the exact "X-date", it said.

This would take the rate the ECB pays on bank deposits to the highest level since November 2008, after a steady climb from a record low of -0.5% in July. Reuters GraphicsThe ECB said in December that rates would be increased "at a steady pace" until it is happy inflation is heading back down to its 2% target. BNP Paribas also thought the ECB might take out the reference to a "steady pace" of rate hikes or offset it so that a 50-basis-point increase would be "not predetermined (but) still a possible outcome". And an ECB survey showed banks were tightening access to credit by the most since the 2011 debt crisis - usually the harbinger of lower growth and slowing inflation. To some observers, this meant the ECB would be wise not to commit to any future policy move.

ECB President Christine Lagarde, speaking in Davos recently, stressed the need for monetary policy to "stay the course." "There were questions recently about why markets don't understand what the ECB will do next," said ING's Brzeski. With updated ECB projections not out until March, Lagarde is likely to be pressed on how the ECB views core inflation, which strips out volatile food and energy prices. The ECB targets headline inflation at 2%, but officials are focused on a core measure. Reuters Graphics5/ Is the ECB more upbeat on the growth outlook?

☆ The European Central Bank says it'll 'stay the course' on rate hikes. But it's not clear for how long
▼ + stars: | 2023-01-26 | by ( Silvia Amaro | ) www.cnbc.com time to read: +1 min

European Central Bank President Christine Lagarde has repeatedly used the phrase "staying the course" when referring to upcoming rate decisions, but some market watchers doubt the bank will keep its hawkish stance for much longer. The ECB entered tightening mode last year with four rate hikes in an attempt to control high inflation across the euro zone. But ECB watchers are asking: for how long? "The size of those rate hikes will depend on the inflation outlook. ECB Executive Board Member Fabio Panetta reportedly said earlier this week that the central bank should not pre-commit to any specific rate moves beyond its March meeting.

☆ Digital euro will be free but limited in scope, ECB says
▼ + stars: | 2023-01-23 | by ( ) www.reuters.com time to read: +2 min

"The digital euro would be a public good," Panetta told the European Parliament's Committee on Economic and Monetary Affairs. "It would therefore make sense for its basic services to be free of charge – for example when using the digital euro to pay another person, as is the case for cash." If issued, the ECB could develop its own standalone app for payments or may allow commercial banks to integrate the digital euro into their own platforms. "The ECB would not set any limitations on where, when or to whom people can pay with a digital euro," Panetta said. The ECB is still only investigating the creation of a digital euro and actual issuance is still years away.

☆ Expansionist dreams threaten ECB digital euro plan
▼ + stars: | 2023-01-17 | by ( Rebecca Christie | ) www.reuters.com time to read: +4 min

The idea of a digital euro with the same reserve backing as its physical equivalent is thus partly about Frankfurt controlling the process. At best, a digital euro could bring more citizens into the banking system, particularly those who don’t have enough money for traditional financial services products. That jars with central bankers’ preference to limit the digital euro to the EU at first. The euro does not need a digital currency, but its members have signalled they want one. Reuters GraphicsFollow @rebeccawire on TwitterCONTEXT NEWSEuro area finance ministers issued a statement on the so-called digital euro on Jan. 16, calling for political oversight and an international approach of a European central bank digital currency (CBDC).

☆ European shares edge up on pharma boost, UK's FTSE 100 nears record-high
▼ + stars: | 2023-01-16 | by ( Bansari Mayur Kamdar | ) www.reuters.com time to read: +3 min

The pan-European STOXX 600 (.STOXX) gained 0.1% in early trading, boosted by a 0.8% rise in healthcare stocks (.SXDP). UK's FTSE 100 (.FTSE) rose 0.1% to 7,852.84, inching closer to a record 7,903.50. "Investors appear to have fallen back in love with UK assets, after a difficult period when FTSE 100 was the wallflower among global indices," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. Weakness in luxury heavyweights such as LVMH (LVMH.PA) and Hermes International (HRMS.PA) weighed on Europe's STOXX 600 on Monday. German arms maker Rheinmetall (RHMG.DE) gained 2.9% on acquiring a stake in Dutch IT hardware specialist Incooling B.V.

☆ Morning Bid: Let it go
▼ + stars: | 2023-01-16 | by ( ) www.reuters.com time to read: +2 min

A look at the day ahead in European and global markets from Anshuman DagaThe land of rising yields is the No. 1 focus of investors on Monday, as Japan's central bank may again let its bond-market peg go higher. Global inflation data due this week could underscore investors' expectations that the worst of the global price squeeze is over. A final read of euro zone inflation for December, as well as readings from Britain, Canada and Japan are due. Core inflation in all four regions is mostly rising and above target but the worst may have passed.

☆ Morning Bid: Hat-trick
▼ + stars: | 2022-12-07 | by ( ) www.reuters.com time to read: +3 min

For the euro zone, commentary by officials is hinting at a peak in rates but anaemic growth and stubbornly high inflation are haunting investors. ECB policymaker Constantinos Herodotou said on Tuesday that interest rates will go up again but are now "very near" their neutral level. Markets will focus on industrial output data due from Germany, while euro zone third-quarter GDP and employment numbers, and UK house prices are among the other economic indicators for the day. Euro zone government bond yields dropped for the first time in three days on Tuesday in the run-up to a raft of major central bank decisions next week. The central bank has made conservative estimates on inflation despite Russia cutting gas supplies to Europe in response to Western sanctions over its invasion of Ukraine.

☆ ECB seeks urgent regulation after multiple crypto bubbles burst
▼ + stars: | 2022-12-07 | by ( ) www.reuters.com time to read: +2 min

Crypto investors suffered a series of blows this year from the collapse of the FTX exchange, to the crash of stablecoin TerraUSD and the decline of Bitcoin. It is like froth: multiple bubbles are bursting one after another," Panetta said in a speech in London. Unbacked crypto assets are a form of financial gambling without any socially or economically useful function, so the task is to thwart criminal activity, protect unassuming investors and save a financial system that may become increasingly intertwined with crypto assets, Panetta said. The links between the crypto market and the financial system could strengthen, especially if major tech companies enter the sector, meaning regulation is urgently required, Panetta said. Regulatory efforts should be directed primarily at preventing the use of crypto-assets to circumvent financial regulation and in shielding the mainstream financial system from crypto risks, Panetta said.

☆ Morning Bid: Crude deflation?
▼ + stars: | 2022-12-07 | by ( ) www.reuters.com time to read: +4 min

With everyone on Wall St seemingly hand wringing about stagflation next year, the price of crude oil has plummeted by up to 10% this week to its lowest since early January - offering some relief in an otherwise murky outlook. Crucially for inflation worriers, year-on-year crude price gains - which were running at 50-100% between February's Ukraine invasion and midyear - have now fallen to just 4% and could soon be a disinflationary force in consumer price baskets. But, contrary to many prior energy market assumptions, the impact of Monday G7's Russian oil price cap at $60pb for seaborne crude is anchoring prices and underscoring massive discounts for Russia oil - already selling for as low as $55pb. The Bank of Canada is the latest on the list on Wednesday and expected to hike rates by another half point, as are the Federal Reserve, European Central Bank and Bank of England next week. European and Asia bourses - even Shanghai and Hong Kong despite the lifting COVID restrictions - were in negative territory too.

Market betting has been swinging between a 50- and a 75- basis-point increase when policymakers meet on Dec. 15. "It's extremely exciting but predicting the ECB for a market participant has become impossible," Carsten Brzeski, global head of macro at ING, said. That saves it from more painful changes of tack after ECB President Christine Lagarde went from all but ruling-out rate hikes this year to presiding over the steepest tightening cycle in the euro's history. But Lane said in a blog post on Friday it may "overstate" how persistent inflation may be. "Inflation is being driven by factors they can't control," he added, citing energy prices, geopolitical tensions and supply-chain disruptions as some of them.

[1/5] Italian Prime Minister Giorgia Meloni speaks during a news conference to present her government's first budget in Rome, Italy, November 22, 2022. Meloni, a fiery conviction politician, has often spoken out against Italy's reliance on technocrats to solve its economic problems and lambasted alleged interference from "high international finance" and "Brussels bureaucrats". During the election campaign Meloni called in vain for her predecessor Mario Draghi to freeze the sale of a majority stake in ITA. PUSHBACKDeputy Economy and Finance Minister Maurizio Leo, an adviser to Meloni, had proposed splitting his ministry by hiving off the finance department responsible for tax matters. The head of the finance department, Fabrizia Lapecorella, has asked to move to another ministry, two sources said.

The dollar index rose less than expected in October prompted bets the Fed would scale back its hefty interest rate hikes. Waller did say that the Fed could now start thinking about hiking at a slower pace. The comments, however, poured cold water on investor hopes for a "rapid Fed recalibration," said Adam Button, chief currency analyst at ForexLive in Toronto. The euro fell 0.24% against the dollar to $1.0322, after rising to a three-month high during Asian trading hours. The dollar index, which gauges the greenback against a basket of six other major currencies including the euro, yen, and sterling, rose 0.74% to 107.072.

☆ Shares and bonds chastened as Fed, ECB urge care
▼ + stars: | 2022-11-14 | by ( Lawrence White | ) www.reuters.com time to read: +5 min

Meanwhile dovish comments from European Central Bank policymaker Fabio Panetta saw European bond yields ease, but short-dated rates remained within striking distance of multi-year highs. Panetta said the ECB needs to avoid overtightening as that could destroy productive capacity and deepen a recession. The benchmark European STOXX index rose 0.26% (.STOXX), and MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) added 0.6%, after jumping 7.7% last week. The dollar index was last seen on Monday at 106.86, still well short of last week's 111.280 top , while the euro eased a touch to $1.032 , after climbing 3.9% last week. The firming dollar also dragged down oil prices, despite the hopes of a demand boost from China's hints at reopening.

☆ U.S. dollar surges as traders say markets overreacted to U.S. inflation data
▼ + stars: | 2022-11-14 | by ( Joice Alves | ) www.reuters.com time to read: +4 min

But Governor Christopher Waller flagged on Sunday that the inflation print was "just one data point" and that other similar readings would be needed to show convincingly that inflation was slowing. Waller did add, however, that the Fed could now start thinking about hiking at a slower pace. The euro fell 0.6% against the dollar to $1.0284 at 1130 GMT, after rising to a three-month high during Asian trading hours. The dollar index, which gauges the greenback against a basket of six other major currencies including the euro, yen, and sterling, rose 0.4% to 107.14. The risk-sensitive Australian and New Zealand dollars slipped, giving up some gains made after China moderated its zero COVID strategy.

☆ Morning Bid: Markets defy COVID blues
▼ + stars: | 2022-11-07 | by ( Clyde Russell | ) www.reuters.com time to read: +2 min

Elsewhere, The Guardian reported that British Finance Minister Jeremy Hunt is set to outline up to 60 billion pounds of tax rises and spending cuts next week, including at least 35 billion pounds ($39.56 billion) in cuts in the backdrop of the Bank of England's recession warning. Stock markets in the region chalked up gains across-the-board, underpinning Friday's rise in global shares after jobs data came in stronger than expected but also hinted at some slack in the tight American labor market. And staying on what the world's richest man is up to, Elon Musk laid out Twitter's mission, sparking debate on content accuracy. Twitter also updated its app to begin charging $8 for its sought-after blue check verification marks as it seeks to shore up revenue. China stocksReuters Graphics Reuters GraphicsKey developments that could influence markets on Monday:Economic data: Germany Sep industrial output, UK Halifax Oct house prices, Euro zone Oct PMISpeakers: ECB Board member Fabio Panetta speaksEuropean earnings: RyanairReporting by Anshuman DagaOur Standards: The Thomson Reuters Trust Principles.

☆ Morning Bid: Polls and prices
▼ + stars: | 2022-11-07 | by ( ) www.reuters.com time to read: +4 min

A look at the day ahead in U.S. and global markets from Mike Dolan. Chinese stocks continued last week's tentative recovery, however, despite officials throwing cold water on any early end to draconian COVID lockdown policies. Some correction of the market's severe underperformance this year was about the only cogent reason given for the ongoing stock bounce. European Central Bank President Christine Lagarde and ECB board member Fabio Panetta both speak. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ ECB's top brass keep focus on fighting inflation
▼ + stars: | 2022-11-04 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, Nov 4 (Reuters) - The European Central Bank's (ECB) two top officials emphasised on Friday the central bank's focus on bring down inflation in the euro area before it becomes entrenched. "We would need to take additional actions until we are more confident that inflation will return to target in a timely manner," she added. Both he and Lagarde said governments should stick to "temporary" and "targeted" support for households affected by the current inflation crisis to avoid supporting demand. Panetta, however, struck a more dovish tone by saying the ECB should avoid raising rates too fast because that could excessively hurt economic growth, home prices and financial markets. Reporting by Francesco Canepa Editing by Balazs Koranyi and Mark PotterOur Standards: The Thomson Reuters Trust Principles.

☆ ECB can't just mirror Fed moves, Lagarde says
▼ + stars: | 2022-11-03 | by ( ) www.reuters.com time to read: +2 min

FRANKFURT, Nov 3 (Reuters) - The European Central Bank must be attentive to policy decisions by the U.S. Federal Reserve, which influence global markets, but cannot just mirror its moves, ECB President Christine Lagarde said on Thursday after the Fed guided for more rate hikes. But Lagarde said the ECB, which itself raised rates by 75 basis points last week, could not simply mimic the Fed because economic conditions were different in the 19-country euro zone - a point underscored earlier by ECB board member Fabio Panetta. Lagarde conceded the ECB was "influenced by the consequences" of Fed action through financial markets and especially the euro's exchange rate, which was falling against the U.S. dollar on Thursday. "Clearly the exchange rate matters and has to be taken into account in our inflation projections," Lagarde said. He was echoed by Portuguese central bank governor Mario Centeno, who said in an interview the ECB had already completed a large part of the rate hikes it sees as needed.

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