ECB to hike rates 50 basis points in March, then May (Paul Diggle, abrdn) – 3/10/2023 at 3:17 PM

(AOF) – The Governing Council of the ECB “will continue the increase of 50 basis points in March with an increase of 50 basis points in May, then a final increase of 25 basis points in June, which will bring the ” terminal rate “at 3.75%”. That’s what Paul Diggle, deputy chief economist at abrdn, predicts a few days before the next ECB meeting. For him “given the recent persistence of core inflation, the risks are to see even higher rates”.

“It is almost certain that the ECB will raise its rates by 50 basis points at its meeting in March, which will bring the deposit rate to 3%”, he said, considering that the Governing Council “is is more or less committed to it at its previous meeting”.

“The real question will relate to the possible indications that the ECB will provide on the future orientation of its policy”, judges the economist: “it will probably refrain from giving precise indications, preferring to remain attentive to the statistics”. For him, however, “the flow of data has clearly strengthened lately, with the rebound of the PMI index in the eurozone and core inflation reaching historic highs”, which “will certainly give the Council Governors a more hawkish bias”.

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