European Central
In a note published Thursday morning, hours before the European Central Bank’s monetary policy decision, Barclays analysts said they expect the ECB to raise interest rates by 75 basis points at its meeting today.
The European Central is heading to raise interest rates strongly this meeting, an expected scenario!
The British Investment Bank analysts explained that the current market data indicates that the European Central will raise interest rates by 68 basis points at this week’s meeting, 123 basis points by the October meeting and 174 basis points by the end of the year, cumulatively.
This prompted Barclays Bank to change its expectations for the pace of the European Central Bank’s tightening to 75 basis points in today’s meeting, followed by 50 basis points and then 25 basis points in the October and December meetings, respectively, to bring the interest rate by the end of the year to 1.5%.
Analysts added that they also expect European Central Bank Governor Christine Lagarde to indicate during the monetary policy press conference that the discussion of the end of the asset repurchase programAPP It could take place at upcoming bank meetings, which signals another hard-line normalization move.
The Barclays note indicated that with the ECB raising interest rates by this amount, this should push the EUR higher in the short term, but the Eurozone economic outlook and ongoing energy concerns should keep the EUR under pressure in the medium term.
On the other hand, if the ECB raises interest rates by only 50 basis points, this may push the euro towards incurring huge losses, and the EUR/USD may test its lows again..