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MNI ECB Preview - December 2022: 50bp Or 75bp? It’s Too Close To Call

MNI ECB Preview - December 2022: 50bp Or 75bp? It’s Too Close To Call

  • While we initially expected the ECB to deliver another 75bp hike in December – and had euro area inflation surprised higher again this would have remained our assumption - our conviction has since ebbed.
  • Uncertainty over whether inflation has peaked, how far the ECB will go when it unveils the ‘key principles’ for APP reduction, and shifting sentiment among both doves and hawks within the GC, make the decision between hiking 50bp and 75bp much more finely balanced.
  • In any case, signs of broadening price pressures, little evidence (so far) that the slowdown in economic activity will be severe or protracted, limited policy rate tightening compared to the Fed and BoE, and the considerable intra-eurozone inflation spread, still suggest that the ECB has someway to go in restoring price stability.
For the full publication please see:

ECB Preview December 2022.pdf

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