ECB to hike in late 2019 – Nordea Markets

Inflation outlook will play a key role when the ECB takes steps to exit from its exceptionally loose monetary policy in the coming months, according to Tuuli Koivu, Research Analyst at Nordea Markets.

Key Quotes

“In our updated inflation forecast core inflation accelerates only gradually and remains clearly below the ECB target at the end of 2019. That supports our view which foresees the ECB exit to be a gradual process. We expect the ECB to continue asset purchases at a declining pace until the end of first quarter of 2019 and raise interest rates for the first time towards the end of 2019.”

“We expect the decision on the continuation of the asset purchase programme to be delayed until the July meeting if inflation numbers in April-May do not change the outlook of fragile inflation.”