The ECB's Unfinished Business To Weigh On Markets

Summary

• The European Central Bank's job is not yet finished. Far from it.
• Our view is that the ECB will phase out reinvestments of its Asset Purchase Programme portfolio throughout 2023 by gradually removing the reinvestment cap.
• In the overall bargaining between ECB hawks and doves that will take place this week, the TLTRO reduction could provide the dovish camp with leverage to press for a less aggressive approach on QT.

Stephan Behnes

By Antoine Bouvet, Senior Rates Strategist; Benjamin Schroeder, Senior Rates Strategist; and Francesco Pesole, FX Strategist

When the ECB meets for the last time this year, it is likely to give markets a stern warning on inflation. This should