The ECB delivered a 25 bps fee hike as anticipated. Economists at Société Générale anticipate another 25 bps hike from the ECB in September.
ECB strikes to full knowledge dependency
The ECB hiked charges by one other 25 bps, as signalled in June, taking the deposit fee to three.75%. As a substitute of signalling any explicit motion in September (other than ruling out fee cuts), ECB motion on the coming conferences will now be totally data-dependent, implying that charges should still rise after a pause.
The ECB additionally decreased the remuneration of minimal reserves to 0% – resulting from their small measurement, that is unlikely to affect the coverage stance and market charges. This exhibits that the ECB is delicate to the losses generated by a lot extra reserves. We expect the theme of lowering losses will proceed subsequent 12 months, by way of ramped-up QT.
We nonetheless see room for another fee hike earlier than core inflation turns definitively downwards, however the newest weakening within the move of financial knowledge additionally means that the September resolution can be a decent name.
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