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MNI Review - 'Determined Mood'

ECB
  • The ECB tightened policy for a seventh consecutive meeting, bringing the governing council closer to the peak of the cycle, however the smaller 25bps step suggests getting to the peak rate will be a slower process going forward. The decision itself was broadly alongside expectations, with slower inflation data and bank lending numbers lessening the need for a 50bps step. The announcement for an end to APP reinvestments in July provided a modest hawkish surprise.
  • The decision has led most sell-side analysts to affirm their peak rate view for the ECB at 3.75 – 4.00%, however many acknowledged the upside risks given the hawkish tones to Lagarde’s press conference. Conversely, a small number on the sell-side flag that a halt to APP reinvestment could counter the need for tightening via policy rates, meaning markets are nearer the peak rate than previously expected.
Full review including summary of sell-side views here: https://roar-assets-auto.rbl.ms/files/52772/MNIECB...

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