ECB governors are beginning to consider raising interest rates at a slower pace than indicated by ECB President Lagarde in December. Bloomberg reported, citing people familiar with the matter. A 0.50 percentage point hike in February remains likely, but the prospect of a 0.25 percentage point hike at the next March meeting is gaining support, they said.
ECB governors are said to be somewhat reassured by the view that Eurozone inflation will fall below expectations, natural gas prices will fall, and the Fed will slow its pace of tightening. How the inflation outlook has changed will be revealed for the first time in the March Staff Outlook, which may support a less aggressive pace of rate hikes, he said.
ECB governors ranging from doves to hawks have raised the central bank deposit rate by a total of 2.50 percentage points in just six months this year, but have shown some willingness to discuss slowing the pace of tightening. .
The market expects an interest rate hike of 0.50 percentage points each at the next two board meetings. It puts that probability at more than 80% and expects central bank deposit rates to rise to just below 3.50% by July.
This is the situation where EUR selling is currently on fire. However, the Bank of Japan’s monetary policy meeting and Kuroda’s remarks are scheduled for tomorrow, so I will wait and see with no position.