Earlier:
A couple of snippet what-to-expects via:
Société Générale
- expect another 75 bps hike by the ECB in October and more rate hikes through next spring, barring a deeper recession, for a terminal rate of 3% by mid-2023.
- Faster rate hikes also move quantitative tightening (QT) up the agenda, and we now expect a gradual start by mid-2023. However, with the balance sheet playing an important role for financial stability (see the UK) and avoiding fragmentation, QT options and communication will need to be assessed carefully.
- Focusing initially on private sector assets, allowing greater capital key flexibility and/or a faster TLTRO reduction could help smooth any market volatility or increased fragmentation.
Nomura:
- We expect the ECB to raise rates by 75 bps
- and signal that more hikes will be in store, point to incoming data and the new forecasts available in December determining the size of the next move but to generally sound hawkish,
- debate when and how to start reducing the ECB’s huge bond portfolio but leave the decision until the December meeting
- and announce technical changes to encourage banks to early repayments of the TLTROs and possibly also measures to ease the tensions in the government bond markets.
