PRIMER: Account of ECB's 15th June meeting due to be released at 12:30BST/07:30EDT

Analysis details (12:05)

The ECB Minutes will be closely watched for any signs of a potential September hike, with a July hike wholly expected by markets, as pricing currently infers an 88% chance of a 25bps hike and 12% for a 50bps move. To recap the June meeting, the ECB delivered another 25bps hike to the Deposit Rate, taking it to 3.5%. The decision to raise rates was once again premised on the judgement that inflation “is projected to remain too high for too long”. Going forward, policy decisions will continue to follow a data-dependent approach and be taken on a meeting-by-meeting basis. Perhaps the main takeaway from the initial announcement came via the accompanying macro projections which saw upgrades to headline and core inflation for 2023 through 2025 with the core 2025 print expected above-target at 2.3%. From a growth perspective, 2023 and 2024 forecasts were revised lower by 10bps. Elsewhere, the GC confirmed that it will discontinue reinvestments under the asset purchase programme as of July 2023. At the follow-up press conference, when questioned on whether the GC expects to keep raising rates, Lagarde replied that there was still “more ground to cover” and that the ECB is not done on hikes. Note, Lagarde again refused to comment on where she saw the terminal rate. Since the June meeting, Bloomberg sources suggested the ECB is set for a “tough debate” next month over whether a possible September rate hike is needed. Meanwhile, at the ECB Sintra Forum (26-28th June), GC members largely kept the door open for a September hike, whilst refraining from telegraphing a terminal rate and keeping a data-dependent approach. On that front, EZ CPI for June was mixed vs expectations, with the core Y/Y rate narrowly topping forecasts (6.8% vs 6.7%), although headline and super-core both printed 0.1ppts under expectations. 

13 Jul 2023 - 12:05- Fixed IncomeData- Source: Newsquawk