Rates as of 0500 GMT

Market Recap

The longawaited European Central Bank ECB meeting was probably the worstpossible outcome for the ECB. The EUR fell, stock markets fell, rates rose, and peripheral European spreads over German bonds widened.

The ECB made several important announcements

Net purchases under the Asset Purchase Programme APP will end on July 1st. Thus finishes the ECBs quantitative easing QE program.
The staff inflation forecasts rose enough to meet the requirements for liftoff,e. raising interest rates
Accordingly the Governing Council intends to raise the deposit facility rate, currently 0.50, by 25bp in July
They said they expect to raise rates again in September, with the size of that hike conditional on the inflation outlook at that time if the mediumterm inflation outlook persists or deteriorates, a larger increment larger than 25bp will be appropriate in September. By persists it seems likely that they mean the new staff inflation forecast for 2024 that will be presented at the September meeting just has to remain at yesterdays new level of 2.1.
They signaled a series of hikes a journey beyond September, without giving much detail on what conditions would determine how long or far the journey would be; and
All policy rates will rise in July and from September. The ECB may reconsider the width of the policy rate corridor the difference between the ECBs deposit rate, what it pays banks that deposit money with it, and the marginal facility…