Markets focus on ECB guidance beyond June as a 25bp hike is fully priced in, with a potential final move in Q3.
The European Central Bank is expected to increase its deposit rate by 25 basis points to 2.25% in June, aligning with market consensus. This move follows growing expectations of further tightening to address inflationary pressures in the eurozone.
With the June hike already priced in, investors will closely watch President Christine Lagarde’s press conference for signals on future policy. Analysts anticipate the ECB will maintain flexibility, avoiding commitments to a specific rate path while leaving room for a possible final 25bp hike in Q3, which would bring the deposit rate to 2.50%.
Market reaction will hinge on whether the ECB signals a pause or additional tightening beyond June. The central bank’s communication is seen as critical for shaping expectations amid mixed economic data and inflation trends.