德意志银行预计欧洲央行将部署反碎片化工具，允许年底前第三次加息50个基点

09:45 AM EDT, 06/16/2022 (MT Newswires) -- Deutsche Bank said that in an emergency meeting on Wednesday the European Central Bank (ECB) Governing Council (GC) determined that market fragmentation was a threat to the even transmission of monetary policy across the eurozone member states.

Two decisions were made. First, the ECB triggered the flexible Pandemic Emergency Purchase Programme (PEPP) reinvestments. Second, the ECB internal committees were tasked with "accelerating the completion" of a new anti-fragmentation tool.

Although details were missing, the intent was clear: the ECB won't let market fragmentation get in the way of the tightening cycle needed to cool inflation.

The ECB was deploying its anti-fragmentation tools earlier than Deutsche Bank was expecting. This reduces uncertainties for the second half of the year.

The deployment of the anti-fragmentation tools cleared the pathway for policy rate liftoff and an accelerated tightening cycle, stated the bank. As such, Deutsche Bank was adding a third 50bps hike to its call.

The bank now saw hikes of 25bps in July and 50bps in September, October and December. This meant 175bps of hikes over the next six months and a deposit rate of 1.25% at the end of this year.

Deutsche Bank was keeping its terminal deposit rate forecast at 2% in 2023, now reached in mid-Q3 2023. On the one hand, stronger anti-fragmentation policies meant the terminal rate should be higher all else unchanged.

However, the faster the United States Federal Reserve hiked, the narrower the window for the ECB to reach the terminal rate, according to Deutsche Bank. It predicted a downturn in 2023.

The risks were skewed to the downside and might ultimately constrain how far the ECB could hike.