17.03.2023 -
Ausgewählte Statements:
„Die EZB beschloss eine Anhebung der drei Leitzinsen um 50 Basispunkte, wodurch der Einlagensatz und der Hauptrefinanzierungssatz wie von uns erwartet auf 3,0 Prozent bzw. 3,5 Prozent angehoben wurden. Damit reagierte sie auf die Inflation, die voraussichtlich zu lange zu hoch bleiben wird.“
„Trotz einer Abwärtskorrektur der Gesamtinflationsprognose für 2025 um 0,2 Prozentpunkte auf 2,1 Prozent liegt sie weiterhin über dem Inflationsziel der EZB.“
„Die Aussichten für das BIP-Wachstum verbessern sich. Sie wurden auf 1 Prozent im Jahr 2023 nach oben korrigiert (+0,5 Prozentpunkte), da die Energiepreise gesunken sind und die Wirtschaft widerstandsfähiger ist als angenommen. Für die Zukunft erwartet die EZB eine Beschleunigung des BIP-Wachstums auf 1,6 Prozent in den Jahren 2024 und 2025, gestützt durch einen robusten Arbeitsmarkt, eine Verbesserung des Vertrauens und eine Erholung der Realeinkommen.“
„Selbst wenn sich der Wind um die Credit Suisse ohne größere Auswirkungen legt, wird dieses Marktereignis wahrscheinlich Spuren hinterlassen - insbesondere in Form einer erneuten Risikoaufwertung, die sich auf die Finanzierungskosten der Banken und damit auf die Kreditvergabe auswirkt."
„In der Zwischenzeit sind wir uns sehr wohl bewusst, dass der Kampf gegen die Inflation noch lange nicht vorbei ist.“
„Wir gehen davon aus, dass die EZB ihre Zinserhöhungsschritte ab der nächsten Sitzung bis Juli auf 25 Basispunkte reduzieren wird, wenn sich die Turbulenzen im Bankensektor gelegt haben, und rechnen bis dahin mit einem Spitzensatz von 3,75 Prozent - wobei Aufwärtsrisiken bestehen.“
„Die derzeitige Dynamik an den Finanzmärkten, die von den Turbulenzen im Bankensektor ausgeht, hat die EZB dazu veranlasst, eine vorsichtige, abwartende Haltung einzunehmen.“
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Hugo Le Damany, Economist und François Cabau, Senior Eurozone Economist, AXA Investment Managers: ECB – Ready to press on cautiously if the dust settles
- The ECB Governing Council (GC) decided to raise the three key ECB interest rates by 50bps in March, bringing the depo rate (DFR) to 3.0%, as we expected.
- Large financial market stress emanating from banking sector turmoil has pushed GC in a cautious wait-and-see mode.
- In line with our expectation, the GC has removed any explicit commitment, though critically indicated there is still more ground to cover on the interest rate front.
- European banking sector is deemed robust and ECB is ready to intervene should need be.
- We expect the ECB to scale down its rate hike clips from next meeting to 25bps until July if the dust settles from banking sector turmoil, foreseeing peak rate at 3.75% by then, with upside risks.
The ECB GC decided to raise the three key ECB interest rates by 50bps in March, bringing the depo rate and main refinancing rate to 3.0% and 3.5% respectively, as we expected, responding to inflation “projected to remain too high for too long”. Despite a 0.2pp downward revision to its 2025 headline inflation forecast to 2.1%, it remains above the ECB’s inflation target.
Uncertainty makes only a dent to interest rate normalization future path for now.Financial turmoil in the past few days involving US regional banks, and more recently Credit Suisse has rendered almost de facto lapsed the just updated macro scenario by ECB’s staff. Furthermore, it may have also crystalized the dissent of views within the Governing Council prior to these events. As a result, the GC decided that the “elevated level of uncertainty reinforces the importance of a data-dependent approach” removing any indication on the future path of interest rate in the monetary policy statement. During the press conference, President Lagarde mentioned that no other options were discussed, and policy decision was agreed with a very large majority, (dovish) dissenters keen to give it more time.
ECB has again revised its rate forward guidance but clarity came during the press conference. Rate forward guidance is now made of three distinct elements – mainly a mix of items previously used: A) assessment of the inflation outlook in light of the incoming economic and financial data. President Lagarde emphasized several times during the press conference the feedback loop between current financial turmoil and inflation outlook. B) Dynamics of underlying inflation. During the press conference, President Lagarde said “as long as we see underlying components of inflation going up, this is not going to stop our fight against inflation. We will need to receive confirmation on the underlying component of inflation, that we are heading in the direction of our target of 2% […]. We are seeing some slight improvement in certain areas but not a lot". C) The strength of monetary policy transmission. Again during the press conference, President Lagarde gave useful insights: “Are we seeing dampening demand? That remains yet to be seen.[…] How much more does it need to be dampened in order to meet the 2% medium term target? To be seen”.
European banking sector is robust. President Lagarde and Vice-President De Guindos took turns reassuring about the resilient nature of the European banking sector as a whole, above and beyond a welcome dedicated paragraph addressing the issue heads-on in the monetary policy statement. Capital and liquidity position are high. Composition of the latter is also reassuring. Exposure to Credit Suisse is limited and not concentrated. Furthermore, De Guindos highlighted the specific nature of SVB’s business model, and that in Europe, the increase in interest rates should be net positive for banks’ profitability. In any case, ECB’s existing toolkit and ECB’s staff creativity have been highlighted that should need be, the ECB stands ready to intervene as appropriate.
We now foresee ECB’s peak rate at 3.75% in July with upside risks. Even if the dust settles with regards to Credit Suisse without major ramifications, we think this market event will likely leave scars, notably in terms of risk re-appreciation to filter through banks’ funding costs, and in turn lending. Meanwhile, we are very much conscious that the fight against inflation is far from over. All in, we now see the ECB hiking the depo rate by 25bps in May – though 50bps remains a distinct possibility, if current shock takes longer to filter through, and another two 25bps hikes in June and July, consistent with a peak rate at 3.75% with upside risks. Echoing today’s ECB meeting, forthcoming data releases will be critical. We will be particularly attentive to the credit/monetary side with M3 data, as well next bank lending survey (02 May), published right ahead of next ECB meeting on 4 May, over and above underlying inflation data prints.
GDP growth outlook is improving. It has been revised up (+0.5pp) to 1% in 2023 due to the decline in energy prices and the economy's greater than thought resilience. Looking forward, the ECB projects GDP growth to accelerate to 1.6% in both 2024 and 2025, "underpinned by a robust labor market, improving confidence and a recovery in real incomes". Although revised down by 0.3pp and 0.2pp respectively, we believe the ECB is too optimistic on the impact of further tightening on growth, in particular in 2024.
Mixed signal from inflation. Headline inflation outlook has been revised down in 2023 and 2024, in response to lower energy prices: 5.3% (-1 percentage point) in 2023 and 2.9% (-0.5 pp) in 2024. However, core HICP has been revised up to 4.6% (+0.4pp) in 2023 but down to 2.5% (-0.3pp) in 2024 in response to tighter monetary policy that will dampen demand. Inflation projection has also been lowered in 2025 even if it remains above the target: 2.1% for headline HICP and 2.2% for core. Two way flows amid volatile financial markets driven by banking sector. Overall, markets perceived ECB's statement and Q&A session as relatively dovish. This has translated into lower yield curve for German yields, reaching 2.38% for 2Y (-6bps) and 2.13% for 10Y (-5bps). But few minutes after the Q&A ends, we have seen a rapid sell off that pushed yields higher (at 2.55% for 2Y and briefly above 2.25% for 10y). EURUSD is broadly unchanged since this morning, fluctuating around 1.06. Equity markets remain driven by the turmoil in the banking sector but at the time of writing this seems to stabilize, helped by reassuring comments made by the ECB.