ECB’s dovishness

The only hawkish surprise delivered by the European Central Bank’s (ECB) meeting last week was the central bank’s decision to hike the main policy interest rate by 25bps to 4.50%, which, itself seems to have been more contentious than in prior meetings: “Some members would have preferred to pause” (ECB press conference). The tone, guidance and press conference were all on the dovish side compared to this summer.

The key sentences of the meeting were: “Based on our current assessment, we consider that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to our target. Our future decisions will...