ING: Meeting Accounts Leaves Door Open To 50bp July Hike

ING retains a base case of the ECB hiking 25bp in July and 50bp in September, but sees the June meeting accounts released today as keeping the door open to a hike bigger than 25bp this month.

• The accounts noted that a group of ECB members wanted a bigger-than-25bp July hike, and ING notes "with the risk of a looming recession in the eurozone and a cooling US economy, some hawks might regret waiting for too long. Instead, they could still push for a rate hike of 50bp in July, trying to frontload the normalisation and also preempting any unwanted discussions in September on whether or not (larger) rate hikes are still justified."
• Euro weakness since the meeting could also be a factor: "The euro approaching parity vis-à-vis the US dollar could be another reason for the hawks to push for a surprise."
• And ING sees potential yet for a shift in guidance: "In any case, remember that it only needed one article in the Wall Street Journal a few days ahead of the last Fed meeting to quickly change market expectations from a 50bp rate hike to a 75bp one. We shouldn’t rule out that Christine Lagarde could still ask Jerome Powell for some communication advice."