With the ECB expected to raise rates again on Thursday, with further hikes planned for the next few months, the only uncertain question is how much further hikes will be.
The European Central Bank is expected to raise its deposit rate by another 50 basis points to 2.5 percent today, in line with its statement in December, which would bring its deposit rate to its highest level since November 2008. But ECB President Christine Lagarde is expected to face the problem of scaling back rate hikes from next month after the Federal Reserve slowed its pace of hikes on Wednesday and some data pointed to a darker outlook for the euro zone.
Annalisa Piazza, fixed income research analyst at MFS Investment Management, said they speculate that the ECB will reiterate its hawkish stance in February as uncertainty about underlying inflationary pressures remains and a change of tone would undermine the ECB’s credibility.
