The ECB delivered another 50bps rate hike, as promised in February and expected. It is not allowing Silicon Valley Bank’s broadly irrelevant failure to break its focus.
Higher core inflation forecasts extend the problem and necessitate a tight monetary setting to break excessive pressures. ECB policy will rightly be data-dependent.
We forecast 25bp deposit rate hikes in May and June, with risks skewed towards further steps if resilience outlives the current financial stability issues.
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