The over-arching theme at the ECB meeting is this: were the hawks able to steamroll the ‘gradualist’ clique and set the course for a 50bps hike in July or in September, or at both meetings? Or will the gradualists bring the hawks’ winning streak[1] to an end and proceed with meekly 25bps hikes at the four Governing Council meetings in the second half the year? While we think the message will be 50bps in July, chances are the battle will still be undecided today. We would have to wait for more ECB-speak or even the July or even September meeting to find out which way the wind is blowing

[1] Note that the hawks have clearly set the tone this year. In December Lagarde and the doves put the ECB on autopilot with the guidance of no rate hikes this year. We know how that turned out.



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