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https://www.wsj.com/articles/ecb-raises-rates-by-half-point-despite-mounting-banking-stress-41c8bae</ref> | https://www.wsj.com/articles/ecb-raises-rates-by-half-point-despite-mounting-banking-stress-41c8bae</ref> | ||
=== May 4 === | |||
The Governing Council decided to raise the three key ECB interest rates by 25 basis points. Accordingly, the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will be increased to 3.75%, 4.00% and 3.25% respectively, with effect from 10 May 2023.<ref>https://www.ecb.europa.eu/press/pr/date/2023/html/ecb.mp230504~cdfd11a697.en.html#:~:text=Key%20ECB%20interest%20rates,-The%20Governing%20Council&text=Accordingly%2C%20the%20interest%20rate%20on,effect%20from%2010%20May%202023.</ref> | |||
The APP portfolio is declining at a measured and predictable pace, as the Eurosystem does not reinvest all of the principal payments from maturing securities. The decline will amount to €15 billion per month on average until the end of June 2023. | |||
Investors now see the terminal rate at around 3.65%, indicating that one more hike is fully priced in but that opinion is split on a second move.<ref>https://www.reuters.com/business/finance/ecb-raise-interest-rates-seventh-time-inflation-fight-2023-05-03/</ref> | |||
==== Commentary ==== | |||
Frederik Ducrozet at Pictet Wealth Management | |||
* "We continue to expect the ECB to hike rates by 25 bps in June, bringing the deposit rate to a peak of 3.50%, with risks of a final 25 bps hike in July depending on future developments in the U.S. banking system," | |||
== References == | |||