The ECB is almost certain to follow today’s 75bp rate hike with further aggressive increases in the coming months. We doubt that even a recession would cause the Bank to halt rate hikes. Against that backdrop, and with uncertainty about policymakers’ willingness to use the new Transmission Protection Instrument, there is significant upside risk to peripheral bond spreads.
Drop-In (Thursday, 8 Sept): Will the ECB step up the fight against inflation? Join us for a briefing after the September meeting decision where we’ll be discussing how fast and far rates are likely to rise – and the risks of policy tightening for the euro-zone bond market. Register now.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services