Februar 2023 -
Ausgewählte Statements:
- „Der ausgewogenere Ton der Europäischen Zentralbank festigt unsere Annahme, dass die EZB den Leitzins insgesamt auf 3,25 Prozent anheben wird - mit einer letzten Anhebung um 25 BP im Mai.“
- „Unserer Meinung nach besteht aber immer noch ein asymmetrisches Risiko für eine mögliche letzte Anhebung um 25 BP im Juni, aufgrund der von uns prognostizierten Abschwächung der Kerninflation.“
- „Wir erwarten, dass die EZB die fällig werdenden Wertpapiere ihres APP-Portfolios nach dem Grundsatz der Proportionalität reinvestieren und dabei den Kapitalschlüssel der Länder respektieren wird.“
- „Der Preisdruck ist nach wie vor stark und die Löhne steigen schneller, gestützt durch robuste Arbeitsmärkte.“
- „Alle Augen sollten auf die Entwicklung des Preisdrucks sowie auf die Entscheidung der Regierung zur Behebung der Energiekrise gerichtet sein.“
- „Die EZB-Erklärung löste eine Rally bei EUR-Anlagen aus, verringerte die Rendite von zehnjährigen Bundesanleihen auf 2,06 Prozent und erhöhte den zehn-jährigen BTP-Bund-Spread auf 183 BP. Der Eurostoxx 600 stieg um 0,7 Prozent.“
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Hugo Le Damany, Economist und François Cabau, Senior Eurozone Economist, AXA Investment Managers: ECB – Underlying inflation to the forefront
- ECB Governing Council (GC) decided to raise the three key ECB interest rates by 50bps in February, bringing the depo rate (DFR) to 2.5%, as widely expected.
- Hawkish tone continued, committing to another +50bps rate hike in March underpinned by “strong price pressures spreading to the economy”.
- “A more balanced inflation outlook”, weak Q1 bank lending survey were likely key elements preventing the ECB from sounding marginally more hawkish, as we and the market expected – given subsequent market rally across EUR assets.
- ECB aims at implementing APP reinvestment applying the proportionality principle, broadly as expected.
- Today’s more balanced tone solidifies our baseline that ECB will hike the DFR to 3.25%, with a final +25bps hike in May. Risks continue to be asymmetric to the upside but less so than before this meeting.
ECB GC decided to raise the three key ECB interest rates by 50bps in December, bringing the DFR and main refinancing rate to 2.5% and 3.0% respectively, as we and market widely expected. The GC maintained its hawkish bias, in line with our expectations, keeping its rate forward guidance unchanged from December “The Governing Council will raise interest rates significantly at a steady pace and in keeping them at levels that are sufficiently restrictive to ensure a timely return of inflation to its 2% medium-term target”, “intending to stay the course”.
Underlying price pressures to the forefront. ECB GC has explicitly put underlying inflation (beyond different measures of core HICP, also including producer prices, negotiated wages, compensation per employee…) underpinning its commitment to “raise interest rates by another 50 basis points at its next meeting in March”. “Price pressures remain strong[…]wages are growing faster, supported by robust labour markets, with some catch-up to high inflation becoming the main theme in wage negotiations. At the same time, recent data on wage dynamics have been in line with the December Eurosystem staff projections” which we recall were very significantly upgraded in December – compensation per employee forecast upgraded by 0.4ppt and 0.5ppt to 5.2% and 4.5% in 2022 and 2023 respectively.
Not all in hawkish, despite real activity faring better than expected, and upside surprise in core inflation (which has yet to turn) which may explain the strong market rally across EUR assets. We think the following three factors are at play. Firstly, the mention that the inflation outlook is more balanced - although still skewed to the upside. This is due to a significant decline in energy prices since December, and also that overall inflation upgrade in December across metrics had been massive – and possibly overplayed. We highlight the introductory statement stipulates that those more balanced risks especially concerns “the near term”. Second, the Q1 bank lending survey displayed substantial lending weakening across firms and households, witness of policy normalization steps taken so far. In an economy where bank intermediation represents the bulk of the economy financing (versus market financing), this is a key forward looking component, as also shown by marked slowdown in money growth. Third, Fed (& BoE) meetings taking place ahead of the ECB meeting may have influenced the tone of President Lagarde where an (renewed excess of) hawkishness was possibly felt not needed.
No contention in APP reinvestment details. Broadly in line with our expectation, the ECB intends to reinvest the maturing securities of its APP portfolio according to the proportionality principle, respecting the countries’ capital key, re-emphasising the “predictable and measured” way by adding “simplicity and neutrality”. In line with its updated framework from last year, the remaining reinvestments of the corporate bond programme will be “will be tilted more strongly towards issuers with a better climate performance”.
All in, sounding less hawkish than we (and the market) expected makes our baseline of the ECB reaching its terminal rate in May at 3.25% all the more likely. After the telegraphed 50bps move for March, we think that “more ground to cover”, and “we won’t be at peak in March” suggest at least another 25bps hike in May to 3.25% in line with our baseline set last December. Together with our projected slow grind lower in core inflation we think risk is still asymmetric to the upside with a possible last 25bps hike in June, but more balanced tone at this press conference, and likely significant downside revisions in headline inflation projections at the March meeting mean risk is less acute. All eyes should be on these underlying price pressures developments as well as on government decision (or not) to withdraw energy crisis measures.
ECB statement and subsequent press conference have triggered an important rally across EUR assets. The 10-year Bund yield dropped to 2.06% (-16bps at the time of writing). The 10-year BTP-Bund spread also rallied to 183bps (from 193). Eurostoxx 600 rallied by 0.7% since the release of the statement. On FX, EURUSD retraced to 1.088 after statement but is now reconverging to 1.094.