ECB: Next week’s 50 basis point hike has been well communicated, focus will be on further path — Rabobank

The Federal Reserve, the Bank of England and the European Central Bank (ECB) They will hold their monetary policy meetings next week. Market participants expect a 50 basis point rate hike and signals that it will continue to raise rates. Rabobank analysts They point out that a 50 basis point rate hike is almost a given for next week. They continue to expect the ECB to cut the hike to 25 basis points from March, but the improving outlook and wage pressures could delay it and pose upside risks.

The hawks still have an advantage, but they no longer have carte blanche

“The ECB hawks remain in a position of strength, but they no longer have carte blanche at the first signs of easing inflation. The 50 basis point rise at next week’s meeting has been well communicated, so the The focus will be on the way forward thereafter.This message will be more difficult, with Lagarde’s latest verbal intervention taking issue with the ECB’s interruption of forward guidance, in favor of a meeting-by-meeting approach. Ultimately, we don’t expect the QT parameters to raise the eyebrows much, but supranational debt could get a favored deal.”

“The ECB has already announced that quantitative tightening will start at a rate of €15 billion a month, and that it will not involve active selling. We do not expect the ECB to favor any of the PPP programs or any of the sovereign issuers to the time for refunds.”