WOOD Flash – Europe macro: ECB paves the way for quicker normalisation
The Governing Council at the ECB has decided to raise interest rates by a bigger 50bps increment, vs. the previous guidance of 25bps. The move did not come as a surprise, however, as press reports were already suggesting the likelihood of a 50bps move during the “quiet period” ahead of the meeting, with a unique resemblance to the latest meeting by the Fed. The ECB has delivered the essence of what was needed, in our view: a bold rate hike and details of the antifragmentation tool. Although the ECB retains full discretion on the anti-fragmentation tool, we believe that what has been announced is open to all member states, and delivers the flexibility that we should have expected from the ECB. Overall, we view this announcement positively and believe that it should be an important step towards the stabilisation of bond yields in the Eurozone periphery, especially CEE. Looking ahead, we now expect the deposit facility rate at 1.75% by the end of this year and at 3.00% by end-2023E.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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