ECB's New Forecasts Could Add to or Dampen Rate Hike Speculation

Dow Jones09-07 13:40

0540 GMT - The intriguing question ahead of the European Central Bank's policy decision on Thursday is whether the central bankers will add fuel to the fire or dampen speculation about rate hikes somewhat, LBBW's Elmar Voelker says in a note. Within the new growth and inflation forecasts "in our view, the focus here is on the expected inflation rate for 2028, because the medium-term inflation outlook is of paramount importance for monetary policy," the senior fixed income analyst says. So far, the ECB has projected an inflation rate of exactly 2% for 2028. If the projection were to be revised upward, "we believe this would be an indirect indication that monetary policymakers are leaning towards another hike toward the end of the year."

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