Europe | The ECB stays on course and promises another similar hike next month

Summary

Overall, today’s meeting does not point to any particular bias to our view that the ECB will hike rates by 50bp in March and 25bp more in May, to reach 3.75%, as a terminal rate. Market reaction was dovish, in line with yesterday's movements on US rates as central banks´ - Fed, BoE and ECB- are seen to be near the peak

Key points

• Key points:
• The ECB raised by 50bps key interest rates and signaled another 50bps hike by March. By then, it will evaluate the subsequent path of its monetary policy.
• Inflation risks became more balanced, but underlying price pressures are still alive
• On the details of the APP bond portfolio reduction, corporate bond reinvestments will be tilted more strongly towards issuers with a better “green” performance

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