Some ECB members believe the rate hike at the end of 2019 is too late, Banking & Finance

Thu, 05 Jul 2018 – 12:20 PM

[FRANKFURT] Some European Central Bank (ECB) policymakers are worried that investors are not betting on rising rates of interest. interest before December 2019, according to people close to the market. People have said that it would be good not to be named because the discussions are confidential, although any decision on rates will depend on the economic outlook of the time.

19659003] Money market investors set a full 10 basis point increase in the deposit rate only in December 2019.

But they raised the probability of a September move to 80% against less than 70% after the report

While the first rate move is still a year or more away, its timing is important as it will set the tone for the exit of the ECB from years of monetary stimulus. The September and October meetings of the Board of Governors are also the latest opportunities for President Mario Draghi to limit his term before the end of his term on October 31.

Decision EQ

The ECB announced last month that it will complete its net purchases of bonds this year, but also that the rates of Interest will remain unchanged until "at least until the summer of 2019." The wording was generally interpreted as leaving the possibility of increasing borrowing costs as early as the September meeting

but Vitas Vasiliauskas, a member of the board of directors, said the guidelines should be interpreted as "until the end of September".

Since the decision, the accommodating rhetoric of decision-makers, including Mr. Draghi, has set the tone for the market. The economists of ABN Amro have postponed their call to September after the last meeting of the ECB.

While the ECB has just announced the end of bond purchases, the issue of interest rates is important. Peter Praet, chief economist of the central bank, said on Tuesday that the new guidance on rates "underscore their central role" as the main tool in the future. In addition, the ECB has adjusted the French, German and Spanish translations of the rate promise made in the June policy statement.

At BNP Paribas, economists have stated that these changes support their view that a rise in September is possible. their baseline.

BLOOMBERG