📝ECB Has A History Of Reacting to Energy Spikes: Nordea

History suggests readiness for the ECB to react to higher energy prices despite limited signs of broader inflation pressures. While inflation had broadened a lot in 2022, when the ECB hiked rates, the same cannot be said about the hikes in 2008 ahead of the global financial crisis and in 2011 in the middle of the euro-area debt crisis.

While we are on the verge of moving our baseline ECB hikes from 2027 clearly forward, we have not done so yet. We still tend to think it would be easier for the ECB to wait at least until the June meeting for better visibility on the how the situation in the Middle East evolves, how the economy reacts to the higher prices, what is the response from fiscal policy and, most importantly, how higher energy prices feed through to other prices and inflation expectations. Further, a full set of staff forecasts would be available at the June meeting.