📝Expect Another 75 Basis Points From The ECB In October: Société Générale

There has been hawkish talk from the ECB, several governing council members supported steps towards a higher neutral rate and a balance-sheet reduction. We now expect another 75 basis points hike from the ECB in October and more rate hikes next spring, barring a deeper recession, for a terminal rate of 3% by mod-2023.

Faster rate hikes also mean that quantitative tightening is now in the agenda, we see ECB starting QT by mid-2023. The balance sheet plays an important role in financial stability (as evident in the U.K.) and avoiding fragmentation, QT options and communication will need to be assessed carefully.

- Société Générale