The European Central Bank is set to deliver a 25 basis point rate hike on Thursday, marking its first increase since September 2023, according to Commerzbank analyst Rainer Guntermann. The move is virtually certain and already fully priced into markets. However, Guntermann does not anticipate consecutive hikes, calling a July follow-up premature. Instead, he projects the ECB will wait until September before raising rates again, signaling a measured tightening cycle. This gradual approach reflects the central bank’s cautious stance as it balances inflation concerns against economic growth vulnerabilities across the eurozone. The forecast suggests limited near-term volatility in euro-denominated assets following Thursday’s announcement, with attention now shifting to September policy meetings. Traders should prepare for an extended rate adjustment period rather than aggressive monetary tightening.
FXnCO Insight
Position for a slow ECB tightening cycle with the next hike likely three months away, reducing immediate pressure on euro positioning and allowing time to reassess eurozone economic data between policy moves.
Source: FXStreet