BNP On Lagarde's "Pre-Announcement"

BNP writes that ECB Pres Lagarde's blog post today "essentially rubber stamped" the next steps for the ECB.

• Their analysts continue to see 175bp of hikes by end-2023, including 25bp hikes in Jul and Sep: "Lagarde’s comments were essentially a pre-announcement of upcoming policy decisions. We would expect the bar for deviations from this path to be very high, i.e. it would require a degree of deterioration in the data that we don’t think is likely. We do think data will weaken, but not enough to deter an ECB focussed squarely on inflation."
• They note Lagarde's language on the balance sheet: "She said that it is “premature” to discuss ending PEPP and APP reinvestments, and that “for the time being” policy rates are the marginal tool. First, this is the first time Christine Lagarde mentions the balance sheet the context of policy normalisation. The fact that she’s pushing back against QT suggests that she wants to pre-empt the hawks starting a public discussion on it. Second, the backstop is mentioned as the other side of the same coin of QT, suggesting to us that a QT scenario would strengthen the case for our long standing call that a backstop will be introduced."