Nomura analysts, led by Andrzej Szczepaniak, anticipate that the European Central Bank (ECB) will initiate a recalibration phase at its 11 June meeting by implementing a 25 basis point hike in the deposit rate, bringing it to 2.25% [1]. This move is described as a signalling step intended to assure consumers and firms that the ECB remains committed to preventing inflation expectations from becoming de-anchored and to keeping inflation under control [1].
Nomura notes that the ECB is likely to maintain its current guidance on quantitative tightening and projects that Harmonised Index of Consumer Prices (HICP) inflation will be around target by the fourth quarter of 2028 [1]. The analysts believe the ECB's perception of the upper bound for the neutral rate has shifted higher, which could justify additional rate hikes as a means to reinforce the central bank's anti-inflation stance without negatively impacting economic growth [1].
The decision to raise rates in June is expected to be unanimous, with support from both hawkish and dovish ECB members, including Schnabel, Nagel, and Stourneras, who have all indicated the likelihood of a June rate hike [1]. Nomura characterizes the June meeting as the start of a new 'recalibration' phase for ECB policy [1].
No immediate market reactions or specific analyst opinions on market impact are provided in the source. However, the emphasis on signalling and the expectation of a unanimous decision suggest a moderate market impact, as the move is intended to anchor inflation expectations rather than surprise markets [1].
CONCLUSION
Nomura expects the ECB to begin a recalibration phase with a 25bp rate hike at the June meeting, aiming to reinforce its commitment to controlling inflation. The move is seen as a signalling step, with the decision likely to be unanimous among ECB members. Market impact is expected to be moderate, as the hike is intended to anchor expectations rather than shift policy dramatically.