Published on Thursday, May 4, 2023

Europe | Slower hikes but not a pause

Overall, today’s meeting makes it clear that following the widely expected next rate hike in June (to 3.50%/4.00%, depo/refi rate), more rate increases are quite likely, although they will also depend on the nature of incoming activity data and, in particular, inflation data

Key points

  • Key points:
  • The ECB raised its key interest rates by 25 bps, affirming that it has more ground to cover, it is not pausing, and there are more rate hikes in the pipeline
  • The hawkish tone on inflation was maintained given still significant upside risks to the inflation outlook
  • On QT, the ECB expects to discontinue the reinvestments under the APP as of July 2023

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