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    Published on Thursday, May 4, 2023

    Europe | Slower hikes but not a pause

    Summary

    Overall, today’s meeting makes it clear that following the widely expected next rate hike in June (to 3.50%/4.00%, depo/refi rate), more rate increases are quite likely, although they will also depend on the nature of incoming activity data and, in particular, inflation data

    Key points

    • Key points:
    • The ECB raised its key interest rates by 25 bps, affirming that it has more ground to cover, it is not pausing, and there are more rate hikes in the pipeline
    • The hawkish tone on inflation was maintained given still significant upside risks to the inflation outlook
    • On QT, the ECB expects to discontinue the reinvestments under the APP as of July 2023

    Geographies

    Topics

    Authors

    Sumedh Deorukhkar BBVA Research - Senior Economist
    Miguel Jiménez BBVA Research - Lead Economist
    María Martínez BBVA Research - Principal Economist

    Documents and files

    Report (PDF)

    ECB-Watch-0523.pdf

    English - May 4, 2023

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