Europe | A hawkish ECB offsets softer hike with ‘no pivot’ warning and launches QT

Summary

ECB opted for a smaller 50 bps hike, but judged rates to be raised significantly at a steady pace of 50bp going forward until they reach their terminal rate, which will be decided on a meeting-by-meeting basis.

Key points

• Key points:
• ECB made clear it has more ground to cover on restrictive monetary policy, and that rates will remain at their terminal rates for quite some time.
• Launched quantitative tightening (QT), starting in March 2023, halving APP reinvestments to € 15 billion per month on average until the end of Q2 2023
• Strong upward revision on the inflation projections, well above the 2% target, which helped the ECB to adopt today’s hawkish tone

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