ECB is likely to repeat implicit message on potential interest rate rise in 2022
Live MintThe European Central Bank is expected to reiterate an implicit message on a potential interest rate rise as early as this year at its March monetary policy meeting, but the main focus is likely to be on the tapering pace of the Asset Purchase Programme, Xavier Baraton, global chief investment officer at HSBC Asset Management, said. “However, opening the door for an interest rate rise over the coming year, with short-term policy rates returning to zero over the next 12 months, will be the implicit message," he said. Money markets are currently pricing in almost two deposit rate increases by the ECB for 2022, with a 25 basis point rise forecast in September and a second, somewhat less than 25 basis point hike envisaged between year-end and early 2023, Mr. Baraton said. “The main message from the ECB is that they want more flexibility this year, so they can adjust policy more quickly if inflation continues to surprise on the upside, but maintain accommodative conditions if growth disappoints or if core inflation starts to move towards the inflation target at the desired pace," he said.