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ABN Amro Ups Rates View, Sees 0.75% Depo Rate In Early 2023


ABN Amro now sees five 25bp increases in the ECB deposit rate to 0.75% at the February 2023 meeting, having previously only seen two 25bp increases (in Jul and Sep 2022). This "significant change of view" is based on a few factors:

  • One, that "inflation has continued to accelerate beyond expectations"
  • Two, that the ECB wants to bring policy back to "more neutral levels": "even though there is not too much that the ECB can do about supply-side driven inflation, there is a general sense that a very accommodative monetary stance is no longer appropriate:"
  • Three, a concurrent upward revision to their Fed hike expectations (to a 3.75-4.00% target range by Feb 2023).
  • Their view the ECB will stop at 0.75% rather than go further due to their expectation that economic growth "slow considerably to clearly below trend rates from early next year".

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