What is your take on the July ECB meeting and what could the next steps be?
At its July meeting, the ECB hiked its three key interest rates by 50bp for the first time in more than a decade, bringing its rates out of negative territory. Hence, the interest rates on the main refinancing operations, the marginal lending facility and the deposit facility will be increased to 0.50%, 0.75%, and 0.00%, respectively, with effect from 27 July 2022. The move was bolder than markets anticipated and more than the ECB itself had hinted at previously, basically putting a de facto end to forward guidance. The bolder-than-expected move was aimed at tackling inflation.
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