ECB will stay the course and keep key rates at the peak level for longer

En bref

A 50 bps rate hike today and another one in March: At today’s meeting, the GC lifted its key rates by another 50 bps, thereby bringing the deposit rate to 2.5% and the repo rate to 3.0%, in line with expectations. It also almost committed to another 50 bps hike at the next meeting in March. Then it will “evaluate the subsequent path of its monetary policy.”


  • At today’s meeting, the ECB’s Governing Council (GC) lifted its key rates by another 50 bps, in line with expectations, and “intends” a further 50 bps hike for March. Thereafter the monetary policy path will be evaluated.
  • Starting in March, the APP reduction by € 15 bn per month will be done according to the redemption’s share of each sub-program. Regarding sovereign bonds (PSPP), this principle will also apply to the share of redemptions of each sovereign. Corporate bond reinvestments will be tilted towards greener firms. 
  • In the accompanying press conference, President Lagarde again adopted a hawkish tone in our view. She made clear that further hikes would be needed beyond March as there is still “ground to cover” and that rates should be kept at a sufficiently restrictive level to ensure inflation goes back to target. 
  • We continue to look for a further 50 bps hike in March, followed by two further 25 bps hikes in Q2, lifting the deposit rate to 3.5%. This is at odds with markets that somewhat scaled down their expectation and see the peak at 3.4%. 
  • Markets perceived today’s message as relatively dovish. In a knee-jerk reaction, equities gained, sovereign yields fell, and the EUR declined

Download the full report

ECB will stay the course and keep key rates at the peak level for longer

© Generali Investments, tous droits réservés. Ce site web est géré par Generali Investments Holding S.p.A. en tant que société holding des sociétés de gestion d'actifs du Groupe Generali ayant, directement ou indirectement, une participation majoritaire dans les sociétés énumérées ci-dessous (ci-après dénommées conjointement "Generali Investments"). Ce site web peut contenir des informations relatives à l'activité des sociétés suivantes : Generali Asset Management S.p.A. Società di gestione del risparmio, Infranity, Sycomore Asset Management, Aperture Investors LLC (y compris Aperture Investors UK Ltd), Plenisfer Investments S.p.A. Società di gestione del risparmio, Lumyna Investments Limited, Sosteneo S. p.A. Società di gestione del risparmio, Generali Real Estate S.p.A. Società di gestione del risparmio, Conning* et ses filiales Global Evolution Asset Management A/S - y compris Global Evolution USA, LLC et Global Evolution Fund Management Singapore Pte. Ltd - Octagon Credit Investors, LLC, Pearlmark Real Estate, LLC ainsi que Generali Investments CEE. *Englobe Conning, Inc, Conning Asset Management Limited, Conning Asia Pacific Limited, Conning Investment Products, Inc, Goodwin Capital Advisers, Inc (désignés comme "Conning").