Nordea’s Jan von Gerich and Tuuli Koivu updated their ECB outlook before the ceasefire news and now expect four 25bp hikes starting in June. They acknowledge downside risks to this baseline after the ceasefire, but stress that broader price pressures are emerging and that an end to the war would not automatically remove the need for ECB tightening.

Four 25bp hikes from June

"We updated our ECB forecast just ahead of the news of a ceasefire and now expect the ECB to hike rates four times by 25bp, starting in June."

"While the ceasefire news immediately tilted the risks to our new ECB baseline to the downside, the outlook remains fraught with uncertainty, while signs of broader price pressures have already started to emerge."

"It is thus not at all given that an end to the war would remove the need for the ECB to tighten policy altogether, even though the conflict in the Middle East has no doubt been the trigger for expectations of near-term ECB rate hikes."

"In financial markets, expectations of a hike as early as at the April meeting have been severely dented, while a 25bp at the June meeting remains fully in prices."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)