Mark Wall, Chief European Economist at Deutsche Bank, says the ECB kept policy rates unchanged and its accompanying statement flagged an intensification of risks that are symmetric, with upside pressure on inflation and downside pressure on growth.
Wall points to the statement’s tone of calm confidence, citing references to the economy’s recent resilience and well-anchored longer-term inflation expectations, but notes this sits alongside rising concern about spillovers from the Middle East conflict.
Those mixed signals mean the ECB has not pre-committed to a June hike and leaves policymakers able to pivot, with the balance to be driven by incoming macro data and the evolution of geopolitical risks.
"It does not pre-commit the ECB to hiking in June but it does not stop the ECB from hiking in June either," Mark Wall said.
