PIMCO: Risks remain skewed towards higher policy rates

PIMCO: Risks remain skewed towards higher policy rates

16 juni 2023

ECB
Konstantin Veit (Pimco)

Konstantin Veit, Portfolio Manager at PIMCO, comments on ECB's decision to raise interest rates.

'Yesterday’s monetary policy decisions have been broadly in line with our expectation of a somewhat hawkish 25 basis point interest rate hike.

While the ECB confirmed its data-dependent meeting-by-meeting approach, it also expects more ground to cover on policy rates to reach sufficiently restrictive levels.

We continue to believe risks remain skewed towards higher policy rates for longer compared to market expectations. We regard 3.75% as the lower end of the terminal rate landing zone for the deposit facility.

We expect more progress on the reduction of the asset purchase programme (APP) portfolio and greater visibility on the terminal policy rate to constitute necessary conditions for a departure from the current pandemic emergency purchase programme (PEPP) reinvestment guidance.'

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