After a 50 bps rate increase in Feb, might the ECB slow rate increases in March? According to analysts at Commerzbank, the ECB plans to stay the course, and the Forex market views this constructively.
“ECB President Christine Lagarde stated that the ECB was committed to swiftly bringing inflation back to the 2percentage – point level. The ECB would continue on its current trajectory with regard to rate increases. Lagarde hinted at many rate increases of 50 basis points for the next meetings during the Dec ECB conference.
Rate expectations have barely altered over the previous few days, suggesting that, in contrast to what is happening with the Fed, the market appears to be believing the ECB’s claims. The euro is perhaps another step forward in terms of monetary and fiscal policy. However, it might get harder for the EUR to strengthen versus the Greenback in the future until rate expectations are further raised.
“It is indeed probable that the attitude indicators that will be released the following week would give the market more traction. Fears of a recession might be further pushed to the backdrop if optimism ought to recover, which would be advantageous for EUR.”
