ECB bond tool seen having no limits as steeper rate hikes loom – Bloomberg

“The European Central Bank (ECB) will unveil an unlimited bond-buying tool next week to help markets better adjust to steeper and faster interest-rate increases than previously thought,” as per Bloomberg’s latest survey of economists published on Friday.

Key findings

Almost 80% predict the instrument, known as the Transmission Protection Mechanism, will carry light conditions for governments it’s used to help.

Nearly all expect the liquidity its purchases create to be reabsorbed in a process called sterilization.

As already-record inflation approaches double digits, economists see the ECB accelerating rate hikes following liftoff on July 21. But they still consider it behind the curve, with the Federal Reserve kicking off monetary tightening back in March and now weighing a historic 100 basis-point move this month.

Economists see the deposit rate, currently at -0.5%, rising by a quarter-point this month and by twice that amount in September, followed by smaller steps at each subsequent meeting until March. It’s expected to peak at 1.25%. 

Also read: EURUSD Price clings to the 1.000 parity level with eyes on US Retail Sales