A Hike But What Is Next

Following a 25bp rate hike, the ECB signaled data-dependent, meeting-by-meeting adjustments. RaboResearch expects a follow-up hike in September while noting that growth projections may be overly optimistic.

Key Takeaways

• 1.The ECB raised the deposit facility rate by 25bp to 2.25% following a unanimous decision.
• 2.RaboResearch maintains that September is the most likely timing for the next ECB rate hike.
• 3.ECB staff projections for growth and inflation show limited downward revisions, but persistent upside risks to inflation remain.

Table of Contents

• Policy rates: Robust across multiple scenarios
• September remains the most likely timing for the next move
• Robustness checks limit the upside potential for policy rates
• Economic outlook: Limited revisions
• Growth: too optimistic?
• Inflation: worse, but not alarming