Deposit rate hike or not for the ECB? - Natixis

Research Team at Natixis notes that the Peter Praet held a very dovish line in an interview published this Friday in Il Sole 24 Ore, bringing up the uncertainty hanging over the outlook for underlying inflation and the appropriate stance for the NIRP (Negative Interest Rate Policy).

Key Quotes

“He also emphasized that the issue of sequencing the coming return to normal in the ECB’s monetary policy still hasn’t been discussed by the governors. The ECB Chief Economist’s comments in our opinion relativize Ewald Nowotny and Ignazio Visco’s recent interventions, which had stimulated market speculation about the likely deposit facility rate hike before the end of the APP (Asset Purchase Program).”

“As far as we are concerned, we are not pricing sequencing inversion into our scenario: we are still betting on the announcement by the ECB of APP recalibration next September, with the first deposit facility rate hike not coming until the end of 2018.”