Rate Hikes: Discussing Our Scenario

The report re-evaluates the ECB's rate hike trajectory following the recent decline in energy commodity prices caused by the US-Iran memorandum. While maintaining a central scenario of two further hikes to 2.75%, the author notes that this path has become significantly less certain.

Key Takeaways

• 1.Recent decline in energy prices post-US/Iran deal has weakened the argument for a hawkish ECB policy.
• 2.The firm's official call remains two more rate hikes to 2.75%, but this scenario is increasingly less probable.
• 3.The ECB's future policy moves are now largely contingent on energy market stability and specific inflationary thresholds.

Table of Contents

• Rate hikes: discussing our scenario
• Changing environment, changing forecasts
• Our previous call
• What changed?
• ECB's communication
• Towards a new scenario
• Conclusion

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