"While the March meeting is too early for a policy change, the overall tone came in hawkish as ECB continued to signal wind-down of the QE program in Q3 and dropped references to lower rates if needed despite the sharp rise in economic uncertainty. We think as the growth shock becomes more evident in the data over the next few weeks, ECB's focus will likely shift away from high inflation focus towards trying to limit economic and market distress as the invasion of Ukraine and its consequences ripple through the system.
"We do not expect the ECB to hike rates this year (despite change in market pricing towards October in the aftermath of the statement) and we believe the risk is skewed towards more QE, not less especially if gas supplies from Russia to Europe are disrupted going forward. That said, uncertainty bounds remain elevated currently.”
About Fidelity International
Fidelity International offers investment solutions and services and retirement expertise to more than 2.5 million customers globally. As a privately held, purpose-driven company with a 50-year heritage, we think generationally and invest for the long term. Operating in more than 25 countries and with $706.3 billion in total assets, our clients range from central banks, sovereign wealth funds, large corporates, financial institutions, insurers and wealth managers, to private individuals.
Fidelity only offers information on products and services and does not provide investment advice based on individual circumstances, other than when specifically stipulated by an appropriately authorised firm, in a formal communication with the client.
Fidelity International refers to the group of companies which form the global investment management organisation that provides information on products and services in designated jurisdictions outside of North America. This communication is not directed at, and must not be acted upon by persons inside the United States and is otherwise only directed at persons residing in jurisdictions where the relevant funds are authorised for distribution or where no such authorisation is required.
Unless otherwise stated all products and services are provided by Fidelity International, and all views expressed are those of Fidelity International. Fidelity, Fidelity International, the Fidelity International logo and F symbol are registered trademarks of FIL Limited.
Investors should note that the views expressed may no longer be current and may have already been acted upon. CC21/02