- There will be a gradual and sustained series of rate hikes towards the "neutral rate"
- ECB might even go beyond that level if needed
The market pricing already indicates that the ECB will be hiking close to the 1% mark by year-end. That leaves little scope for additional hawkishness in my view and in turn, should limit the euro's upside. Add in to the fact that economic risks are rising and now we have fragmentation risks to watch out for, it is going to be a challenge for the ECB to stick with this narrative.
