The ECB has been sounding more hawkish recently. What are the market expectations for their next policy meeting? Are we looking at a sustained hold, or is a final hike still on the table given persistent inflation in some Eurozone components?
Could it be a 'hawkish hold' then? Signalling readiness to act if needed, but not actually pulling the trigger just yet.
Honestly, it feels like they're trying to talk down inflation without actually having to do another hike. The market seems to be pricing in a very low probability of a move.
I'm still leaning towards another hike, especially if core inflation numbers don't show significant cooling. Some of those peripheral economies are still running hot.
Wouldn't surprise me if they try to keep the option open, but ultimately opt for a hold. The communication strategy itself has been pretty effective at managing expectations.
I think a sustained hold is the most likely scenario. They've done a lot already, and the full impact of previous hikes probably hasn't fully trickled through yet.
I'm more interested in their forward guidance. That's where we'll really get a sense of their long-term stance, more so than the immediate rate decision itself.