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MNI ECB Preview - June 2023: Tightening Towards The Stop

MNI ECB Preview - June 2023: Tightening Towards The Stop

  • The ECB will hike rates by 25bp and confirm the previous decision to end APP reinvestments in July.
  • Absent a sharp drop in core inflation, we would expect the ECB to hike again in July.
  • Even if the ECB were to raise rates further in September, this would likely be the last turn of the screw.

As other ECB watchers have commented, the June policy decision has been well-telegraphed: the deposit rate will almost certainly increase by 25bp and the previous decision to end APP reinvestments in July will be confirmed. The communication since the May meeting indicate that the dovish members concede that there is still some room to raise rates, while the more hawkish members are no longer calling for larger hikes (50bp+). Continuing to hike by a more modest 25bp is the compromise position that the GC seem to be aligning around.

For the full publication, please see:

MNI ECB Preview June 2023.pdf

Central Bank PreviewECB - PreviewCentral Bank ReportsMarkets

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