ECB hiked rates by another 75 bp – as expected. The bank flags further tightening ahead but dropped the reference on “next several meetings”. That backs the view that the ECB is set on another hike in December but will then take account and the battle between hawks and doves will become more heated, as Lagarde flags the shift to decisions to be taken at a meeting-by-meeting basis. The ECB decided to change the terms of the TLTRO loans after all, with the rate from November 23 to maturity the average key rate. At the same time, the bank offered more opportunities for early repayment of the loans. The remuneration of minimum reserves will be at the deposit rate now. EURUSD is holding just above parity for now, as markets digest the initial announcement and wait for Lagarde’s presser.
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Stuart Cowell
Head Market Analyst
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