ECB’s Holzmann, De Guindos and Knot jostle over rate-hike expectations

Latest comments from various European Central Bank (ECB) policymakers highlight indecision over the market’s rate-hike expectations.

ECB Vice President Luis de Guindos told a German newspaper, “The European Central Bank will take action if it sees second-round inflation effects and a de-anchoring of medium-term inflation expectations,” per Reuters.

On the same line were comments from Governing Council member Klaas Knot who mentioned, “Market expectations of an interest-rate increase ‘later this year’ are ‘quite realistic’,” according to an interview with Les Echos per Bloomberg.

It’s worth noting ECB policymaker Robert Holzmann was quoted by Austrian news as saying, “The bank could send a clear message about fighting inflation by raising interest rates before ending its stimulus programme of bond purchases.” The policymaker adds, “The system of bond purchases is difficult for the population to understand. An interest rate increase would have been a signal that everyone would have understood.”

FX implications

EUR/USD begins Monday’s trading mostly unchanged around 1.1050 after witnessing the first positive week in six.

Read: EUR/USD Weekly Forecast: Corrective advance over?