Saxo's Macro Analyst about ECB: I think a 50 bp interest rate hike is still the best case for the February meeting
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Eurozone inflation and next European Central Bank decisions are arousing interest as it's not obvious what's going to be. Christopher Dembik (Head of Macro Analysis at Saxo Bank) shares his thoughts on the interest rate with us.
Provided Eurozone inflation comes at less than 10% on Wednesday, would you expect ECB to go for a series of 25bp rate hikes?
Christopher Dembik (Saxo Bank): I think a 50 bp interest rate hike is still the best case for the February meeting. Actually, I expect at two more 50 bp hike in the coming months followed by a 25 bp in May. Then the ECB might be eager to pause. But I don't see any urgent need to lower the scope of the interest rate hike. The slowdown in inflation is actually not sharp enough.
We also share Saxo Asia view on ECB:
ECB's dovish surprise likely as inflation slows
The ECB is considering a slower pace of rate hikes than Christine Lagarde indicated in December. While a 50bps increase next month remains the most likely outcome, a 25bps move in March is gaining support. Inflation in the Eurozone is slowing, and a sharp drop in natural gas prices suggest that we can continue to expect lower inflation in the months to come atleast until the 2023 winter risks emerge. The final CPI print for December for the Euro-are will be released today and ECB's minutes of the December meeting are due tomorrow.
