Hold on, we're not hiking
|We expect the ECB to leave the deposit rate unchanged at 2.0% on Thursday 18 December in line with consensus and market pricing. Data has come in stronger than expected by ECB staff, so we expect an upward revision to the growth forecasts amid inflation little changed. We see the ECB holding rates steady at 2.0% in both 2026 and 2027 due to inflation undershooting in contrast to market expectations of 37 bp worth of hikes. We expect a muted market reaction as Lagarde will likely signal ECB being on hold for a while, reiterating the 'good place' assessment.
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