Analysts at Societe Generale believe that The European Central Bank (ECB) is likely to announce another 75 basis point rate hike on Thursday.suggesting more rate hikes are on the table.
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“Another is expected 75 basis point hike by the ECB in October and more rate hikes until next springbarring a deeper recession, to reach a terminal rate of 3% in mid-2023.”
“Faster rate hikes also make advance quantitative tightening (QT) on the agendaand now we wait a phased start by mid-2023. However, as balance sheet finance plays an important role for financial stability (see UK) and to avoid fragmentation, QT options and communication will need to be carefully assessed.”
“Focus on private sector assets initially, allow for greater capital key flexibility and/or faster TLTRO drawdown could help smooth out any market volatility or further fragmentation.”
Source: Fx Street
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