Ukraine Watch: NBU cut its key policy rate contrary to all market forecasts

Oleksandr PECHERYTSYN MARCH 15, 2024 09:38 CET

The NBU cut its key policy rate by 50 bp to 14.5% and further reduced other key policy rates. This indicates that the NBU is approaching a "fine-tuning" regime in its monetary easing cycle. We maintain our key policy rate forecast of 13% at the end of 2024.

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The Green Deal - 03/24 (EN) #responsiblebanking

Jörg BAYER MARCH 14, 2024 13:17 CET

This months publication is all about green bonds vs SLBs. The former are increasingly holding their ground against SLBs, which is reflected not only in the record-breaking EUR primary market volumes, but also in investor demand and therefore in pricing. This trend can also be seen outside the public debt capital market in the SLL segment. Meanwhile, the ESG segment as a whole is facing increasingly more headwinds in the US.

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ECB Watch: ECB updates operational framework

Franz ZOBL MARCH 14, 2024 12:48 CET

Long awaited but still earlier than expected, the ECB communicated some key principles for implementing monetary policy and providing central bank liquidity. Not all is clarified yet and most of the changes are only relevant in the longer-run.

The key take-aways are:

  • The deposit rate will remain the ECB's key interest rate to steer short-term money market rates - like now. The main refinancing rate will be set only 15 bp above it from September 2024 onwards - that's new.

  • Main refinancing operations will become important as a source of liquidity for banks - once again. Conditions remain as generous as they are now: fixed-rate, full allotment against broad collateral.

  • The longer-run consequence for short-term money market rates should be somewhat higher spreads to the ECB's deposit rate and more volatility but still well behaved.

  • On the ECB's bond holdings information remains sketchy. The run down of APP and PEPP will continue as outlined. A new structural portfolio will be introduced at a later stage but not before quantitative tightening has ended. It can be questioned whether this new portfolio will be implemented before the next review is due in 2026.

  • The minimum reserve ratio remains at 1% with a remuneration at 0% - no change.

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B&H Watch: Score in extra time - negotiation status for B&H

Ivona ZAMETICA MARCH 13, 2024 12:22 CET

After two waves of EU laws adoptions in B&H Parliament during 2023/24, the European Commission finally recommended to the European Council granting status of negotiator for B&H. This decision should have enormous positive impact on further politic and economic domestic momentum.

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Czechia Watch: Inflation target reached!

Vratislav ZAMIS MARCH 11, 2024 15:30 CET

After more than five years, the Czech Republic has again managed to achieve its inflation target, with inflation falling from 2.3% in January to an equal 2% in February. Price developments thus exceeded our and market expectations.

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ECB Watch: No changes, some signals!

Franz ZOBL MARCH 07, 2024 16:26 CET

The ECB kept key interest rates unchanged at today's meeting. Regarding the timing of a first rate cut the ECB kept a low profile in its official statement, only for President Lagarde to provide some signals during the press conference. New projections show mildely lower inflation and economic growth for 2024. Today's ECB meeting is fully in line with our expectations, which is why we are sticking to our view of a first rate cut in June.

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Serbia Watch: Key rate flat

Ljiljana GRUBIC MARCH 07, 2024 14:23 CET

The Executive Board of the National Bank of Serbia (NBS) decided to keep the key rate unchanged at 6.5%, amidst the still elevated geopolitical risks. We continue to expect a launch of gradual cuts in Q2.

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