Monetary tightening despite grim growth

Stagflation risks have risen, as inflation stays undesirably high, while global GDP is slowing. Both the World Bank and the OECD slashed their global growth forecast, respectively to 2.9% and 3%, for this year. At the same time, the ECB staff projections showed a significant upward revision for inflation in the Euro Area, with headline and core inflation in 2024 now above the ECB’s 2% target. As such, the ECB will join other major central banks in tightening cycle, with a first 25bp rate hike in July . We expect a total of 200bp hikes from the ECB over the next one-and-a half years .