Deutsche Bank writes the move might have been made to support the currency.
“It has been clear for a while that the ECB are not happy with the FX markets and the rhetoric of endorsing hikes from July onwards has had minimal response in spot. Today, with Knot opening that door, we have seen the currency respond,” DB writes.
Economists at Deutsche Bank see 50 basis point hikes in July and September, noting that Villeroy has been pointing to 1-2% as the range of neutral and they want to get there.
They highlight the next round of CPI numbers as pivotal and expect a lively 25 vs 50 bps debate to develop.
- This reply was modified 4 months, 2 weeks ago by TradersCom.