Link Securities| According to the minutes of the October meeting of the European Central Bank (ECB) Governing Council, at which the institution kept interest rates unchanged after 15 months of consecutive increases, its members opted for a more cautious “wait and see” stance, influenced by the gradual easing of inflationary pressures and concerns about an imminent recession. This decision follows a series of ten consecutive rate hikes since July 2022,…

Peter Goves (MFS Investment Management)| We believe ECB policy rates have most likely peaked for this cycle. This argument is based on three pillars: growth dynamics, the inflation outlook and what the ECB itself is communicating. On growth, the euro area is currently operating in a quasi-recessionary environment. Although we don’t technically have two quarters of negative GDP prints, Q3 growth was -0.1% and below ECB expectations. The vast majority…

Annalisa Piazza (MFS Investment Management)| The ECB left policy rates unchanged after yesterday’s Governing Council meeting, with the depo rate remaining at 4%. Forward guidance remained unchanged, with future decisions being completely data dependent. Based on the current assessment, the ECB will leave rates at sufficiently restrictive levels to make sure inflation returns to 2%. EGBs rallied after the relatively dovish press conference and spreads marginally tightened. At the current…

CdM| The market had given a 70% probability that the ECB would raise +25 bps at yesterday’s meeting, and it happened. The Governing Council of the European Central Bank (ECB) decided to raise interest rates by 25 basis points, so that the reference rate for its refinancing operations will stand at 4.50%, while the deposit rate will reach 4% and the lending rate will be 4.75%. With this tenth consecutive…

Peter Goves (MFS Investment) | Although the ECB didn’t quite explicitly say “we are at peak”, the change in guidance effectively points in that direction in our view. We likely have rates on hold ahead of us now as opposed to ongoing hikes in our view. In other words, unless there is a decisive change in prevailing data trends, we think the ECB is more or less done. The focus…

Minutes of the last monetary policy meeting. The ECB council considers that restoring price stability before that date would “depress economic activity to an unnecessary level”. Inflation has become a burden for the euro area and, in general, for all regions of the world. Central banks are fighting with all their might to try to regain the price stability dictated by their mandate, but some are already beginning to do…