ECB defied market fears and decided to press on with a 50 basis point rate hike today. This comes even as the bank lowered its own inflation forecasts for 2023 and 2024.
Headline inflation
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2023: 5.3% vs 6.3% previously
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2024: 2.9% vs 3.4% previously
Core inflation
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2023: 4.6% vs 4.2% previously (higher)
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2024: 2.5% vs 2.8% previously
DE30 moved lower in the first minutes after the release as ECB hinted that inflation is expected to remain too high for too long, what justifies further rate hikes. On the other hand, ECB changed the wording of the statement and it no longer hints at future rate hikes. It looks like that ECB is paving the way for a potential slowdown in its tightening cycle. Lagarde is likely to repeat that decision will be data dependent at a press conference at 1:45 pm GMT.

Source: xStation5
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