ECB more hawkish as investors rein in rate hike bets

The ECB’s hawkish conversion appears to be all but complete, with more officials this week joining the ranks of those calling for rates to rise in July and expressing a clear desire to get the deposit rate out of negative territory this year. That leaves the Bank consistent with our own call since March and that of investors. But worries about weaker growth means investors are now paring their expectations for rates next year and beyond. Next week, we expect data to confirm the small increase in euro-zone GDP in Q1 and show that employment also rose, while we will also be watching closely the minutes of the April ECB meeting.