After today’s economic news showed core inflation in the Eurozone eased for the first time in 10 months, the markets are expecting the European Central Bank (ECB) to slow its aggressive rate-hike campaign when it meets on Thursday. The markets have fully priced in a 25 bp rate hike, and the chance for a 50 bp hike has fallen to 20% from more than 30% last week.
Today’s Eurozone Apr core CPI eased to +5.6% y/y from +5.7% y/y, the first time in 10 months that core prices have eased. Also, today’s ECB's quarterly Bank Lending Survey said credit standards "tightened further substantially" in Q1, and the decline in net loan demand from firms was more than foreseen by banks in the previous three months and the largest decline since the global financial crisis. The tighter credit standards are dovish for ECB policy.
