###POV: IS THE ECB FORWARD RATE PATH TOO......>

EONIA: ###POV: IS THE ECB FORWARD RATE PATH TOO STEEP?

- MNI PINCH calculate markets pricing the ECB deposit rate will be zero by the

end of 2019, in effect there being four rate hikes of 10bps each, closely

matching the 4 rate hikes priced into the Fed rate path until the end of 2019

and more than the roughly three priced in at the BoE.

- Considering the first 10bp rate hike by the ECB is not priced in until Mar

2019, this looks like a very steep path for interest rates and would probably go

against a gradual removal of monetary policy stimulus.

- A lot I suppose rests on this weeks ECB GC meeting and updated macroeconomic

staff forecasts with bank analysts having mixed views on whether the central

Bank tweaks its forward guidance, but most agree that both growth and inflation

will be nudged higher. 

- At the last staff forecasts in December they projected inflation to be just

1.4% in 2018, 1.5% in 2019 and then 1.7% in 2020, higher then those forecast in

Sep but only due to higher oil and food prices. One would of thought a sharper

rise in inflation forests would be needed for ECB to raise rates so quickly.