Core inflation persistence to trigger ECB/BoE tighter for longer

In breve

Last autumn the inflation tsunami peaked in the major Western economies. But since then, the development became somewhat more heterogeneous.



  • The recent bold hike by the BoE (50 bps) and hawkish comments from the ECB at the Sintra meeting have fostered market suspicion that another round of inflation-induced monetary tightening might be in the offing. 
  • While energy and food prices will increasingly provide relief and the influence of “greedflation” is expected to abate, wage growth will remain elevated due to tight labour markets. This will keep underlying inflation stubbornly high.
  • Accordingly, core inflation is likely to “overshoot” the ECB’s and BoE’s targets. Thus, given hawkish Sintra comments, we now expect the ECB to hike to 4%; the BoE to raise to 5.75%. Both central banks will keep their peak rates well into H2 2024. 
  • Notwithstanding the expected key rate hikes, a sustainable rise in Gilt and Bund yields is not on the cards. On a hedged basis, a historically high yield gap makes very long-dated Gilts attractive for euro investors.

Read the full publication below

Core inflation persistence to trigger ECB/BoE tighter for longer

© Generali Investments, tutti i diritti riservati. Questo sito web è fornito da Generali Investments ed è considerato come una comunicazione di marketing e una promozione finanziaria riferita ai prodotti e servizi delle società elencate di seguito, appartenenti al Gruppo Generali: Generali Asset Management S.p.A. Società di gestione del risparmio & Generali Investments Luxembourg S.A. (nel prosieguo, congiuntamente indicate come Generali Investments). Inoltre, il sito può contenere comunicazioni di marketing e promozioni finanziarie di prodotti e servizi di società appartenenti alla piattaforma coordinata da Generali Asset Management S.p.A. Società di gestione del risparmio, nello specifico di Infranity, Sycomore Asset Management, Aperture Investors LLC., Plenisfer Investments SGR, Lumyna Investments, Sosteneo Infrastructure Partners SGR e Generali Real Estate S.p.A. Società di Gestione del Risparmio