Credit Agricole CIB Research discusses its expectations for tomorrow's ECB policy meeting.

"The ECB is widely expected to hike rates by 50bp and signal further tightening ahead but there is a lot of uncertainty regarding the updated forward guidance and, in particular, the data-dependency of any future tightening," CACIB notes.

"In all, we think that President Christine Lagarde could signal further tightening but condition its aggressiveness on the quality of incoming Eurozone data especially now that the ECB is also doing QT. If confirmed, Eurozone fixed income markets could pare back some of their rate hike expectations and further price in credit risks stemming from QT. To the extent that this curbs the EUR rate appeal and results in wider peripheral spreads, the EUR could lose some ground across the board," CACIB adds.