The European Central Bank policy meeting is today, Thursday, 8 September 2022

  • statement due at 1215 GMT
  • with ECB President Lagarde's press conference following at 1245 GMT
ecb 08 September 2022

Earlier previews

Soc Gen highlight that not raising by 75bp is now the risk;

  • Until recently, we would not have believed in an outsized 75 bps ECB hike given the risks to the growth outlook, even though we think the ECB has reacted too slowly so far. However, with high inflation now lingering for longer, risking a more problematic wage-price spiral, and, importantly, with markets pricing in close to a 75 bps hike, the focus is rather on the risks of not raising by 75 bps, with the currency impact an important aspect. We thus think there is an urgency to reach a more neutral policy stance.
  • Given the threat to the ECB’s credibility, we also wonder why quantitative tightening (QT) is not discussed. As we argued in the past, not using QT should imply higher rate hikes.
  • The greatest risk of raising rates by 75 bps now is that the ECB may need to trigger the TPI soon. This, along with an uncertain growth outlook and a low neutral rate (1%), will be stressed by the doves who might put up more of a fight than in July (also as there is no TPI to compromise on).
  • We expect rate hikes of 75 bps, 50 bps and 25 bps in the forthcoming meetings this year, taking the deposit rate into neutral territory as the economy slows, and another three 25 bps hikes next year. With high uncertainty over how effective rate hikes will be in a landscape of high excess liquidity, QT will need to be considered soon, unless a deeper slowdown in activity intervenes.


If you have not managed to keep up with the alphabet soup of European Central Bank policy initiatives and are thus in the dark on "TPI":

  • Transmission Protection Instrument (TPI)
  • its a new bond purchase scheme aimed at helping more indebted euro zone countries and preventing financial fragmentation within the eurozone

You can access a further summary here at Reuters:

  • ECB rate hikes push up borrowing costs on the bloc's periphery disproportionately, meaning countries like Italy, Spain and Portugal face a bigger rise in yields than "core" members like Germany and France.