With recent communications from the ECB maintaining a distinctly hawkish tone, President Trichet could use Thursday’s post rate-announcement press conference to signal that the next hike in interest rates will come as soon as June. However, with the euro-zone’s economic recovery set to lose steam in the second half of the year, and the peripheral debt crisis set to deepen, we continue to believe that interest rates will not rise as far as the markets are currently anticipating.
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