Executives of the ECB tried today to moderate the climate of euphoria
The market is moving upwards today bonds resulting in the 10-year bond yield falling below 4%. ECB officials tried today to moderate the euphoria that had been caused in the previous days, stressing that interest rate cuts are not yet visible.
It is recalled that yesterday the governor of the Bank of Greece, Giannis Stournaras, predicted that under certain conditions the ECB could proceed with the first small reduction in its interest rate, in August 2024.
Today Irish counterpart Gabriel Makhlouf said it was “very, very early” to start talking about when the European Central Bank might start cutting interest rates and equally too early to rule out further hikes.
After all, eurozone consumers also raised their expectations for inflation in the next 12 months to 4%, according to a survey by the European Central Bank. Of course, household forecasts of inflation are inherently imprecise, but they can affect wage demands, spending and saving – three critical factors in determining retail prices. The ECB’s Survey of Consumer Expectations, conducted in September, showed that the median respondent believed inflation would be 4% over the next 12 months, up from 3.5% in August.
The ECB’s chief economist, Philip Lane, followed suit, arguing that although some progress has been made in deflating inflation, it is not yet sufficient, it was pointed out in APE BPE.
Inflation eased to 2.9% last month from 10% hovering around a year ago but Lane predicted flat or even accelerating price rises next year, before falling to the 2% target in 2025.
In the secondary bond market today, and more specifically in the Electronic Transaction System (HDAT) of the Bank of Greece, transactions of 174 million euros were recorded, of which 58 million euros related to purchase orders.
The yield on the Greek 10-year bond stood at 3.95% from 3.98% yesterday against 2.63% of the corresponding German bond, resulting in a margin of 1.32%.
In the foreign exchange market, the euro moves downwards against the dollar, with the result that in the afternoon the European currency trades at 1.0725 dollars from the level of 1.0702 dollars, which opened the market.
