ECB not so hawkish? Kazaks reports possible lower hikes

Today, the big surprise was lower inflation in Germany, although the sizable drop was due to a one-off in energy markets. Of course, the peak of inflation may be behind us and inflation should fall, also due to the fact that gas prices have returned to near the minimum levels of last year.

A very interesting statement was made by Kazaks from the ECB, who last year was the first to signal the possibility of a hike from the ECB. He indicated that he expected two strong hikes at the next two meetings, and most likely a subsequent reduction in the scale of increases. The euro is not reacting as Kazaks basically confirms 100 bp hikes in the first quarter of this year. On the other hand, if inflation surprises with larger declines, the ECB's withdrawal of further hikes after 2 more meetings cannot be ruled out. 

The euro is not reacting, although Kazaks reports possible smaller hikes after Q1 2023. Source: xStation5