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For the third time since summer, hopes of an imminent Fed pivot have triggered market relief.
The Governing Council (GC) became less hawkish on rate hikes and will lay out future steps on quantitative tightening (QT) in Dec.
The growth recorded for 2023 is therefore likely to be well above or well below the level of zero currently expected. What factors could tip the balance?
Sticky inflation and an optimistic outlook for the economy sustain the Fed ’s hawkish stance. Rates should peak at 4.75% in Q1 2023, but we expect a first cut by the end of next year.
The latest analysis from Gilles Moëc, chief economist at AXA IM, on the ECB’s rate hike outlook for the remainder of the year.
Interest rates are rising at a rapid pace, as central banks admit that inflation is no longer just a series of transient shocks, but there is a risk that it becomes more ingrained. For many, this feels like a new regime in monetary policy and financial markets.
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