ECB: ECB Speak Wrap (July 24 – August 7)

For the full summary of ECB speak since the July decision, click here.

ECB speak since the July decision has portrayed a Governing Council that has increased the bar to a September cut. 

• Kazaks, Simkus, Nagel, Muller, Kazimir, Makhlouf have all argued for a “steady hand” on rates. The hawkish Holzmann is unsurprisingly also in this camp, though his term on the Governing Council concludes at the end of August.
• However, more dovish leaning viewpoints have come from Villeroy and Rehn, with the latter “increasingly concerned about economic growth in the euro area”.
• Overall, data such as the August flash PMIs (August 21st) and the August flash inflation round (month-end) will be key to monitor ahead of the September decision, for which guidance will also be influenced by an updated set of staff macroeconomic projections.
• The MNI Policy Team’s post-decision sources piece noted that the hawkish shift following the July Governing Council meeting is more limited than markets’ reaction would suggest, particularly given the recent EU-US trade agreement - while there is a new mood music it has been overinterpreted.
• ECB-dated OIS currently price just 2.5bps of cuts through September, with 21bps of easing through the middle of next year.