Nordea economists explain three plausible scenarios for the outcome of the European Central Bank's monetary policy meeting next week:
"The ECB hikes rates and keeps its tightening bias intact; this would be a hawkish scenario that would likely boost interest rate expectations more durably. We think this is the least likely of the three scenarios."
"The ECB raises rates by another 25bp, but softens its tightening bias to suggest the bar for further hikes has risen; such an outcome would likely boost rate expectations only briefly."
"The ECB leaves rates unchanged while retaining its tightening bias; we think such an outcome would put some downward pressure on interest rate expectations, even if it would be considered a hawkish hold. This is also our baseline scenario."
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