ECB's Vasle: Market pricing for rate cuts is excessive

<ul><li>Market pricing for both start of rate cuts and totality of cuts in 2024 is excessive</li><li>Recent accommodation priced into rates is inconsistent with policy stance to get inflation back to target</li><li>Inflation will rebound in 1H 2024 and ECB should only reassess policy outlook after this period</li><li>Wage formation in Q1 2024 will be crucial for policy outlook</li></ul><p>This continues from the pushback since last week but the market is having none of it. The current pricing still shows ~57% probability of a rate cut in March with 38 bps of rate cuts priced in for April. As a whole for next year, there is 154 bps worth of rate cuts priced in at the moment.</p>

This article was written by Justin Low at www.forexlive.com.