The European Central Bank is expected to deliver a 25 basis point rate hike at its September 10 meeting, pushing the deposit rate to 2.50 percent, according to Nomura’s Global Markets Research team. The analysis from Andrzej Szczepaniak, George Buckley and Josie Anderson anticipates the ECB will then pause its tightening cycle after this increase.
This projection comes as markets weigh the ECB’s response to persistent inflation pressures against growing concerns about eurozone economic slowdown. The anticipated quarter-point move would mark a continuation of the central bank’s gradual approach to normalizing monetary policy, though Nomura’s call for a subsequent pause suggests policymakers may be nearing the peak of this hiking cycle.
Traders should prepare for potential euro volatility around the September 10 decision, particularly if ECB communication deviates from these expectations. Fixed income markets across European sovereign debt will likely remain sensitive to any forward guidance signals.
FXnCO Insight
Position for euro currency pairs and European bond exposure based on a hawkish hike followed by dovish pause, with particular attention to ECB language around future policy flexibility.
Source: FXStreet