European Central Bank’s (ECB) policymaker Pablo Hernandez de Cos said on Thursday that he hasn't yet observed clear evidence of de-anchoring of inflation expectations in the eurozone, as reported by Reuters.
"Quantitative tightening could potentially cause market turmoil in certain market segments, as supply may outgrow demand and liquidity may dry up."
"This could imperil policy normalisation path at a time in which all our efforts should be focused on it."
"Policy rates are thus a more effective instrument to tighten monetary policy."
"On basis of current information, the median terminal rate value across models is at 2.25%- 2.50%, estimated with significant uncertainty."
"This target-compatible terminal rate is not necessarily the same as the natural or neutral rate."
"At best, we have some estimates about its long-run value, which range from -1 to 0%, equivalent to 1-2% long-run nominal rates."
"Running down APP holdings could lower the terminal rate."
"In case of APP, ECB could potentially decide to start reducing asset stock earlier than markets currently anticipate."
The EUR/USD pair is having a difficult time staging a rebound after these comments and it was last seen losing 0.68% on the day at 0.9668.
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