At as we speak’s ECB assembly, the ECB delivered a 50bp price hike in all three coverage charges as broadly anticipated, so now the ECB deposit price is at 2%. The ECB additionally introduced that the top to full APP reinvestments would begin in March 2023, which was extra particular than the presentation of key ideas anticipated. The ECB guided that from March 2023 to June 2023, its securities holdings will decline by EUR15bn monthly on common. The tempo past that’s nonetheless to be decided.Â
Lagarde highlighted the info dependent and assembly by assembly method, however on the identical time additionally gave a agency steering that as we speak’s 50bp price hike won’t be a single 50bp price hike and that extra will observe.
Whereas we anticipated an open-ended wording of extra price hikes to return, we had been stunned by the numerous hawkish steering Lagarde gave as we speak. In our preview, we had already pointed to the danger to our forecast for longer/greater than our baseline and on account of as we speak’s assembly we revise our ECB name and add one other 50bp to the height cycle price to three.25%, so our new name is for 50bp in February (unchanged), 50bp in March (+25bp) and 25bp in Could (new). We stay open to additional price hikes in June subsequent yr.
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