The ECB Governing Council did not surprise at its latest policy meeting, with a step-down in the pace of interest rate increases whilst retaining a hawkish tone with regards to too-high inflation.
A 25bp hike is all but guaranteed at this week’s Fed meeting. However, the idea that this is the last hike, and that cuts will soon follow, is too optimistic. Inflation is still high/persistent, even if it is slowing, so is the labour data.
We have had a raft of euro area data that puts us more firmly in the 25bp rate hike camp for Thursday’s meeting. EA GDP last week coming in broadly in line with Consensus at a tepid 0.1%.
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