Bankinter : The ECB raises the reference rates +50 b.p.: Deposit: +3.00%, Director +3.50% and Credit Marginal +3.75%. In line with what the ECB anticipated in February. However, it does not comment on future steps. It revises its inflation forecasts downwards, to +5.3% in 2023 (vs +6.3% previously estimated), +2.9% in 2024 (vs +3.4% previously) and +2.1% in 2025 (vs +2.3% previously). In her subsequent appearance, Lagarde says that upcoming decisions will be “data-dependent” and highlights the solidity of the banks, in terms of capital and solvency, and says she is prepared to act if necessary.
Analysis: The ECB maintains the pace of rate hikes at +50bp, despite the tensions of the last few days on banks. However, the message is clearly more Dovish: (i) it lowers inflation forecasts for the next few years, including the Underlying, conveying that the more restrictive monetary policy is producing results; (ii) it no longer makes any statement regarding future rate hikes; and (iii) it conveys a certain degree of calm regarding the banks. This is therefore good news for stock markets. We revise our interest rate forecasts downwards for upcoming meetings. The most likely scenario is that we will only see one more hike of +25bp (in May), which would bring the maximum rate level to 3.75%/3.25% (Director and Deposit). We previously estimated 2 additional hikes of +25 b.p. (in May and June) to 4.00%/3.50%. Regarding balance sheet reduction, we maintain our forecast of acceleration to -€25,000M/month as of July (vs -€15,000/month currently).
