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ECB Watch: Not sufficiently restrictive yet
The ECB will continue on a path of 25bp rate hikes next week, and we think such a path will extend at least to the July meeting. New staff forecasts are set to illustrate that inflation is not under control yet. • The ECB will hike rates by 25bp next week and signal that more remains in store. • The new staff forecasts are likely to see slight upward revisions on inflation, giving the hawks more ammunition. • We see risks tilted towards a hawkish market interpretation of the ECB’s message and thus somewhat higher market interest rate expectations. • New liquidity measures look unlikely. The ECB is almost ... (full story)