ECB strikes a somewhat dovish tone, despite inflation remaining top priority

Wednesday 20 April 2022

No further acceleration of stimulus withdrawal was hinted at by the ECB in April. It confirmed both the previous guidance on QE (likely to end in Q3) and the policy sequence, with interest rates to rise at “some time” after QE ends. The ECB is likely to implement a gradual rate normalisation after the end of QE in an ever more data-dependent environment, given high uncertainty regarding the fallout of the Ukrainian conflict on growth and inflation. Flexibility has been emphasised as a valuable means to preserve the transmission of monetary policy and avoid fragmentation. We expect QE to end in Q3, as announced, followed by rate normalisation, with two hikes before year-end, followed by another in Q1 2023.

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Investment Talks - April 2022

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