Soon to be ECB policymaker Moulin says it's too soon to say if ECB needs to act in June

ECB policymaker Villeroy urges against speculating on timing of potential rate hike

The desk interprets François Villeroy's recent comments as a clear signal that the ECB is not rushing towards rate hikes, emphasizing a data-driven approach over a predetermined timeline. Per the full note [source], Villeroy's insistence on needing a 'critical mass of data' before any tightening suggests that traders should remain cautious about speculating on specific months for potential hikes. This dovish stance contrasts with the more hawkish sentiment from other ECB members, indicating a divergence in policy outlook within the governing council. As we approach the next ECB meeting, this commentary may temper expectations for immediate rate adjustments.

ECB's Villeroy: We don't have enough information on core inflation yet

The desk interprets ECB Governor Villeroy's recent comments as a signal of continued caution regarding interest rate hikes, emphasizing the need for more data on core inflation before making any decisions. Per the full note [source], Villeroy highlighted the absence of a 'critical mass of data' to justify immediate action, particularly in light of moderating core inflation and wage growth expectations. The market is currently pricing in a 92% probability of a rate hike in June, but Villeroy's stance suggests that the ECB is prepared to act only if inflationary pressures show signs of becoming entrenched. This cautious approach aligns with our consensus view that the euro will remain under pressure unless we see a significant shift in economic indicators.

ECB policymaker Demarco says that the ECB will probably need to hike in June

ECB June rate hike nearly certain but July move seen as premature, sources say