Fitch Ratings has raised its forecasts for ECB policy rates as the central bank has become much more concerned about core inflation pressures and has signalled that rates will peak at a higher rate than Fitch expected in its December Global Economic Outlook forecast. We now think the ECB will raise its refinancing rate (MRO) to 4% (previously: 3%) by May 2023, and the deposit rate (DFR) will reach 3.5%. There will be a total of 150bp in hikes in 1H23, starting with 50bp at each of the ECB’s meetings on 5 February and 16 March 2023. ECB guidance has changed substantially. The October 2022 monetary policy statement ... (full story)