Danske Research discusses its expectations for this week's ECB policy meeting on Thursday.
"This week, the ECB will meet to deliver another rate hike in its hiking cycle that started in July last year. This time, the question is whether it will slow the hiking pace to 25bp or continue to hike once more by 50bp. We believe it will be a 50bp compromise deal with no specific forward guidance (nor guidance on balance sheet normalisation in H2 yet), but repeating a data-dependent approach to future policy decisions," Danske notes.
"On Tuesday 2 May, the ECB and Eurostat will publish the last and important data releases ahead of the meeting. The Bank Lending Survey (BLS) and loan growth data will likely deteriorate compared with previous releases, while inflation is set to bring another high print (core around 5.7%). A significant surprise in any of the releases could change the market pricing and hence probabilities of a 25bp or 50bp rate hike outcome. Refraining from delivering a 50bp rate hike at this meeting is set to result in a dovish market reaction, with easing financial conditions to follow," Danske adds.