ECB dampened the market’s speculation on rate hikes – Danske Bank

Sandeep Kanihama FXStreet Contributor

Pernille Bomholdt Henneberg, Chief Analyst at Danske Bank, suggests that the hawkish message at the latest ECB meeting resulted in the market pricing in a 10bp deposit rate hike at the end of this year.

Key Quotes

“This then resulted in prominent ECB members dampening market participants’ expectations with a dovish communication that postponed the pricing of the hike to late 2018.”

“In our view, the pricing of hikes from ECB is very premature as the inflation outlook should not be strong enough to tighten the monetary policy this year. Another argument for hiking rates could be that banks were suffering after the long period of negative policy rate but it does not seem to be the case that the ECB wants to hike just to support the banking sector.”

Author

Sandeep Kanihama

FXStreet Contributor

Sandeep Kanihama is an FX Editor and Analyst with FXstreet having principally focus area on Asia and European markets with commodity, currency and equities coverage. He is stationed in the Indian capital city of Delhi.

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