Rabobank’s Global Strategist Michael Every asserts that the European Central Bank (ECB) is likely to adopt a more hawkish stance due to escalating war risks in the Middle East, which present greater dangers from policy inaction than from tightening monetary policy too aggressively [1]. Every anticipates that the ECB will revise its inflation forecasts upward significantly, reflecting increased price pressures, while also acknowledging that economic growth may be weaker than previously projected in March by ECB staff [1].
Rabobank expects the ECB to implement a 25 basis point rate hike at its upcoming meeting, raising the deposit rate to 2.25% [1]. Furthermore, Every suggests that another rate hike is probable, with the next move most likely occurring in September [1]. The strategist’s outlook is based on Rabobank’s own inflation forecasts and the current geopolitical environment, which is seen as a key driver for the ECB’s policy shift [1].
No specific market reactions or analyst opinions beyond Rabobank’s projections are mentioned in the article. The focus remains on the ECB’s anticipated policy response to inflation and geopolitical risks [1].
CONCLUSION
Rabobank expects the ECB to respond to heightened war risks and rising inflation by raising rates, with a 25bp hike now and another likely in September. The outlook signals a more hawkish ECB stance, prioritizing inflation control despite weaker growth projections.