The ECB continues its tightening cycle | Eurobank
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The ECB continues its tightening cycle

• The ECB delivered the second rate hike of the current tightening cycle, raising its policy rate by 25bps to 1.50%. We expect the policy rate to reach 1.75% by the end of the year.
• The ECB has suspended the collateral requirement rules for Portuguese government bonds after they have been downgraded to below investment status by Moody’s.
• ELA facility could be used for liquidity provision to Greek banks if government bonds fall to default status.
• Divergent growth pattern complicates monetary policy, as higher rates put a further burden on public and private finances in the periphery.
• Risks to inflation remain on the upside, implying that a more aggressive tightening cycle might materialize.