The ECB has also changed its stripes dramatically. It is still making monthly purchases from the APP but the program is expected to conclude in Q3; then, rate hikes could follow "some time" afterwards. This begs the question: When in Q3? President Lagarde had been cagey about the timing, but has recently revealed that it will likely be "early" in Q3, which puts a July rate hike into play. We see the deposit rate lifted first in July, followed by the refi rate in September and December. But do not rule out the possibility that the ECB will lift all the key rates (deposit, marginal lending, and refinancing rates) in one fell swoop
We believed that the RBA's rate hike criteria had been met earlier this year, when the trimmed-mean measure of inflation was already within the target for two quarters in a row, and export and import prices had been surging. But, Governor Lowe was still "patient"; that is, until April, when that adjective was dropped from the press release. The RBA then lifted the cash rate 25 bps in May to 0.35%. The BoJ is looking beyond price pressures and is firmly glued to the sidelines, with Governor Kuroda repeating the oft-used phrase that they will not hesitate to ease further if necessary, given the downside risks to economic growth. This has and will continue to spark continued weakness in the yen
BMO Capital Markets
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