June ECB Cheat Sheet How To Train Your Hawks

ING previews the 11 June ECB meeting, projecting a 25bp hike aimed at stabilizing inflation expectations. The report outlines four scenarios and suggests a hawkish tone is necessary to avoid market volatility.

Key Takeaways

• 1.The ECB is expected to hike rates by 25bp on 11 June, with a primary focus on maintaining hawkish market expectations to prevent inflation expectations from de-anchoring.
• 2.While 25bp is fully priced in, the central bank must balance growth concerns with the need to avoid a dovish communication trap.

Table of Contents

• Scenario analysis: How to position for Lagarde's alternatives
• Focus on keeping markets hawkish
• Rates: ECB should tread carefully to keep inflation expectations anchored
• FX: ECB hawkishness can reinforce floor for EUR

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