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Macro & Markets: Beware of overinterpretation
Markets seem to have concluded that central banks are turning more dovish and the time for large rate hikes is nearing the end. We disagree and flag the risks that the ECB could hike by another 75bp and see the Fed having to raise rates to above 5%.]. “Incoming data so far suggest that the room for slowing down the pace of interest rate adjustments remains limited, even as we are approaching estimates of the “neutral” rate.” -Isabel Schnabel, Member of the ECB’s Executive Board on 24 November. At the October monetary policy meeting, the ECB emphasised the substantial progress already made in withdrawing ... (full story)