MNI ECB Preview - March 2023: 50bp Hike Still On The Cards, Explicit Guidance For May Unlikely

50bp March Hike Still On The Cards, Explicit Guidance For May Unlikely

• President Lagarde has strongly guided the market to a 50bp hike in March and stressed that this would happen unless an extreme scenario materialises. Cleary the failure of Silicon Valley Bank (SVB) is an extreme event.
• With the fallout of SVB ongoing at the time of writing, and the situation fluid, the ECB’s prior pre-commitment for March is clearly in doubt.
• Absent any further communication from the ECB, we still expect the ECB to hike by 50bp in March given the persistence of underlying inflation and resilience of the euro area economy, but our conviction is much weaker at this point. Even if the ECB goes ahead as planned, the heightened uncertainty would preclude further explicit rate guidance beyond March

ECB Preview March 2023.pdf