ECB Policymakers flash mixed signals in their weekend speeches – by anilpanchal7 ECB EURUSD RiskAppetite NewsTrading
officials crossed wires during the weekend and flashed mixed signals about the bloc’s monetary policy and it’s next moves.
Among them, ECB Vice President Luis de Guindos told an Italian newspaper that ECB interest rate hikes are in their final stretch. The policymaker also warned that higher borrowing costs could put stress on banks' asset quality, even if indicators so far remain healthy.We have now entered the home stretch of our monetary policy tightening path. And that’s why we are returning to normality, to 25 basis-point steps.
At the moment, the improvement in margins more than compensates for the potential losses from the growth in NPLs. The combination of a slowing economy and the interest rate hikes will bring a rise in the cost of funding for banks and possibly an increase in non-performing loans.De Guindos also warned about so-called shadow banks - a category including non-bank financial firms such as funds or insurers - that are experiencing ‘some tension’ given that they are highly leveraged and more are exposed to liquidity risk.longer than previously thought to help tame inflationary pressures.
It's no secret that given the fundamentals I would also be satisfied with a 50 basis point increase in interest rates but a 25 basis point increase is a return to normal.Headline inflation in the euro zone sometimes falls and then rises again a bit but the key point is that core inflation is still creeping up.
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