UOB Group’s Economist Lee Sue Ann sees the ECB starting its hiking cycle in the next year.
Key Takeaways
“Despite record rises in inflation, the European Central Bank (ECB) kept key interest rates unchanged. It will, however, discontinue net asset purchases under the Pandemic Emergency Purchase Programme (PEPP).”
“The latest decision comes as market participants have started pricing in two rate hikes for the ECB this year. However, ECB President Christine Lagarde continues to play down that possibility.”
“At this juncture, we still think that the ECB will stick to its road map, and we are still not expecting any rate increases by the ECB until next year. The next monetary policy meeting is on 10 Mar, when the ECB will also be updating its growth and inflation forecasts.”