A rate hike and then what? Our ECB preview

A rate hike and then what? Our ECB preview

A rate hike and then what? Our ECB preview

ECB June rate hike nearly certain but July move seen as premature, sources say

ECB preview: a hawkish hold is expected but there's risk of a disappointment

The European Central Bank (ECB) is poised to maintain its policy rate at 2.00% amid a backdrop of rising inflation and mixed economic signals, suggesting a cautious approach moving forward. Per the full note [source], the ECB's forward guidance is expected to remain non-committal, emphasizing a data-dependent stance. Market participants are particularly focused on the press conference for insights into the ECB's reaction function, especially given the recent increase in headline inflation driven by energy prices. The market is currently pricing in 80 basis points of tightening by year-end, with a high probability of a June rate hike, which may lead to disappointment if the ECB adopts a less hawkish tone than anticipated.