Further ECB Rate Hike Seen 'Entirely Realistic'

Dow Jones
Yesterday

1323 GMT - A further hike of the European Central Bank's deposit rate to 2.75% during one of the year's final two meetings is "entirely realistic", Eurizon's Massimo Spadotto writes. As things stand, one more hike should likely be considered the base-case scenario, even though it is by no means certain, he adds. "This remains heavily dependent on the trajectory of commodity prices, which are naturally influenced by developments in the [Middle East] conflict," the head of fixed income says. "However, markets have already fully priced in two additional rate hikes for this year; consequently, these moves should not weigh on the market per se but could instead potentially trigger a 'sell the rumor, buy the fact' dynamic," he says. The ECB raised its key policy rates by 25 basis points, bringing the deposit rate to 2.50%.

 

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