PRIMER: ECB account of the September meeting to be released at 12:30BST/07:30EDT

Analysis details (12:53)

In-fitting with market pricing and against a split consensus amongst analysts, the ECB opted to pull the trigger on a 75bps hike, taking the deposit rate to 0.75%. The statement noted that the GC expects to raise rates further over the next "several" meetings, whilst taking a data-dependent and meeting-by-meeting approach. In terms of other measures, the ECB opted to continue with its current reinvestment policy whilst suspending its two-tier system by setting the multiplier to zero. The accompanying staff forecasts saw 2022, 2023 and 2024 inflation projections revised higher with the 2024 forecast of 2.3% indicating that further policy tightening is required. On the growth front, 2022 GDP was revised a touch higher, however, 2023 was slashed to 0.9% from 2.1% with the downside scenario touting the possibility of negative growth. At the follow-up press conference, President Lagarde noted that the decision on rates was unanimous, albeit there were differing views across the council; any colour around these differing views will be of note for the market, but ultimately deemed as somewhat stale given the fluidity of global inflationary dynamics. With regards to the magnitude of hikes going forward, Lagarde noted that 75bps increments are not the norm, but moves will not necessarily get smaller as the ECB heads towards the terminal rate. Note, source reports after the meeting suggested another 75bps hike could be on the cards for the October meeting, whilst Chief Economist Lane was reportedly more hawkish at the meeting than he had been in a speech a few days before the confab. Despite guidance that the GC will be following a meeting-by-meeting approach, Lagarde stated that hikes will probably take place at more than two meetings, but fewer than five, markets will be looking to see if such a viewpoint was alluded to in the account of the meeting. Finally, source reporting following the meeting revealed that QT is expected to be discussed at a non-policy meeting in Cyprus on Oct. 5th and will likely also be debated at subsequent meetings.

06 Oct 2022 - 08:05- Fixed IncomeData- Source: Newsquawk