Analysts at JP Morgan said in their latest client note that the European Central Bank (ECB) is likely to deliver another 50 bps rate hike before taking a pause.
Key quotes
"There is no doubt in our mind that the ECB at its next meeting on 8 September will revise its inflation projections considerably higher whereas it is less likely that there will be sufficient information - short of a gas rationing shock - to change significantly the growth forecast.”
“In our view, this further upward inflation revision will not fail to make an impression on the Governing Council, even though uncertainty about growth prospects is likely to be high. Against this backdrop – and keeping in mind our modal view of a mild recession around the turn of the year.”
“We now expect the ECB to hike 50bp in September, rather than proceed in two 25bp steps in September and October. After having taken the policy rate to 50bp in September, we then expect the ECB to be somewhat more sensitive to that activity data and to pause its rate hikes in October - by that time it may be clearer that the Euro area economy heading in to outright contraction."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD consolidates in multi-day lows near 0.6350 ahead of RBA rate decision
AUD/USD is consolidating its recent losses above the mid-0.6300s during the early Asian session on Tuesday. Traders prefer to wait on the sidelines ahead of the critical Reserve Bank of Australia (RBA) interest rate decision due to be announced at 3:30 GMT.
EUR/USD languishes near YTD low, just above mid-1.0400s on bullish USD
EUR/USD refreshes YTD low on Tuesday and is pressured by a combination of factors. Bets that further ECB rate hikes may be off the table continue to undermine the Euro. The Fed’s hawkish outlook pushes the USD to an 11-month top and contributes to the fall.
Gold approaches $1,800 as demand for the USD prevails
Spot Gold fell to a fresh multi-month low of $1,827.11 a troy ounce on Monday amid resurgent US Dollar demand. The Greenback suffered a minor setback at the beginning of the week, as generally encouraging Chinese data and upbeat United States (US) news underpinned the mood.
Bitcoin price macro outlook remains uncertain, analyst says
Bitcoin price is still not in the clear, according to analyst and trader Rekt Capital, who explores the price action on a macro perspective. It comes after the big crypto leaped almost 5%, testing the $28,600 levels before a retraction.
RBA Decision Preview: Australian central bank expected to hold interest rate steady for fourth straight time
The Reserve Bank of Australia (RBA) is on track to keep its key interest rate unchanged for the fourth straight time on Tuesday, in a meeting that will be the first one for Michele Bullock as the new central bank Governor.