“The European Central Bank is in trouble. It needs to balance rising inflation with downside risks to growth, while economic uncertainty remains high due to Russia’s brutal invasion of Ukraine and EU sanctions.
Given decisions made last month to slow the pace of net purchases, the European Central Bank may hold off on changing policy on April 14 and wait until June to review its course. However, after March’s higher-than-expected inflation rate of 7.5%, Christine Lagarde is likely to adopt a hawkish tone, focusing on future electives and possibly announcing a future review of net purchases, which may end before September to close the window for the first time. Increase the zoom rate.
Investors should prepare for more volatility in the coming months, with more policy and pricing adjustments to be made either way. On the short end of the curves, the June-July ECB meetings could be rated lower if the ECB confirms net purchases in the third quarter, as policy makers are still trying to read higher energy-related inflation.”
Pietro Pavico, European Economist at abrdn
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