ECB Preview: The art of compromise – Danske

Analysts at Danske Bank provide a sneak peek at what to expect from next Thursday’s European Central Bank (ECB) monetary policy announcements.

Key quotes

“Next week, the ECB will meet to deliver another rate hike in its hiking cycle that started in July last year.”

“This time, the question is whether it will slow the hiking pace to 25bp or continue to hike once more by 50bp.”

“We believe it will be a 50bp compromise deal with no specific forward guidance (nor guidance on balance sheet normalization in H2 yet), but repeating a data-dependent approach to future policy decisions.”

“Economic developments since the ECB meeting, coinciding with the banking turmoil, have shown resilient economic activity and another record-high core inflation print.”

“Headline inflation has declined on the back of base effects, but the stickiness of core inflation and wages should pave the way for another 50bp rate hike, in our view.”