Even the hawks on the ECB Governing Council have seemed reluctant to call publicly for a 100bp hike at the Bank’s late-October meeting, but we still think that is the most likely decision and expect policy rate to rise to around 3% in the coming months. Meanwhile, we are somewhat bemused by the ECB’s wish to start discussions about QT. With pressures likely to mount on peripheral yields, is seems more likely that it restarts QE before long. Next week the first of the October business surveys will probably add to the gloom about the economic outlook.
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