Introduces Jeremy Stretch to discuss ECB Lagarde story and euro implications.
Anna Edwards
Jeremy Stretch
Market knew of ECB transition, but is assessing how it changes policy narrative. Transition could lead to a slightly more hawkish ECB bias medium-term.
Asks if story is a sign of governments backstopping institutions ahead of populist rises in France/UK, linking to pressure on Fed.
Anna Edwards
Jeremy Stretch
Absolutely. Independence is a central tenet perceived as threatened. Makes sense for policymakers to get ahead of French election risk to facilitate independence narrative.
Asks about Reform UK plans for BOE mandate and diversity of opinion.
Tom Mackenzie
Jeremy Stretch
Current MPC already has diverse opinions with 5-4 splits. Suggesting need for more diversity is disingenuous and implies wanting opinions aligned with political views, threatening independence.
Asks for his view on BOE: does he agree with previous guest expecting 75bps cuts starting in March?
Tom Mackenzie
Jeremy Stretch
Thinks they cut in March. But sees less aggressive easing thereafter due to inflation persistence. Terminal rate likely higher than 3%, maybe 3.5%.
Asks what other FX crosses look mispriced.
Tom Mackenzie
Jeremy Stretch
Likes Scandinavia (SEK). Sterling is troubling due to political risk and near-term rate story. Likes AUD vs GBP (Sterling Aussie down).