Hawkish ECB, weak economy

The ECB’s messaging this week was hawkish and suggests that the risks are skewed towards the ECB’s deposit rate rising above our forecast to a peak of 3.75%. Recent data support the Bank’s view that there are only tentative signs that underlying price pressures are easing, but we think that its new GDP forecasts are too optimistic. Next week, we expect the Swiss National Bank to raise rates by 50bp and the Norges Bank to hike by 25bp.