ECB and quick review of the data

As the ECB cut its deposit rate by 25 bps to 3.50% and they forecast a 2.50% inflation rate this year, they consider a REAL rate of 100 bps to still be restrictive. ‘Restrictive’ is in the eye of the impacted. As to what comes next, “The Governing Council is not pre-committing to a particular rate path.”

And their QT continues on as “The APP (asset purchase program) is declining at a measured and predictable pace, as the Eurosystem no longer reinvests the principal payments from maturing securities.” Also, “The Eurosystem no longer reinvests all of the principal payments from maturing securities purchases under the PEPP (pandemic emergency purchase program), reducing the PEPP portfolio by 7.5b euros per month on average.”

Yields in Europe are down slightly and the euro is up a touch with stocks all green. No real surprises here and we await the presser.