ECB: June hike prospects strengthen – Nordea
Finance ECB: June hike prospects strengthen – Nordea Nordeas Chief Analyst Jan von Gerich notes that the European Central Bank (ECB) kept its key rate at 2.0% and maintained a data-dependent, meeting-by-meeting stance. However, he highlights that a June rate hike now looks likely, with markets already pricing in a 25bp move and nearly 75bp of tightening by year-end, closely linked to energy price developments. Nordea sees June rate hike likely “The ECB expectedly kept rates unchanged at 2.0% and retained language about closely monitoring the situation with a data-dependent and meeting-by-meeting approach without pre-committing to a particular rate path.” “Both upside risks to inflation and downside risks to growth have intensified, while longer-term inflation expectations remain well anchored.” “We continue to think the ECB will hike rates by 25bp in June.” “In the Q&A, Lagarde said the ECB is moving away from the March baseline (which implicitly included market expectations of two 25bp rate hikes at the time), supporting expectations of a hike in June.” “A 25bp rate hike for June remains more or less fully in prices, while a total of just below 75bp of hikes is in prices by the end of the year.” “For now, the link between energy prices and ECB rate pricing is