The European Commission’s Spring Forecast for 2022 revised Eurozone inflation upward to 6.1% in 2022 as expected with forecasts expected to decline to 2.7% in 2023. Growth projections in the region were subsequently lowered to 2.3% from 2.7% in February.
Initial reaction from the Euro was positive with higher inflation potentially leading to a more aggressive ECB. Money markets are looking more hawkish than last week Friday with roughly 94bps priced in for 2022 as opposed to 80-85bps on Friday. The ECB’s Villeroy added support for the Euro stating that the June meet will be “decisive” while moving towards a “neutral rate”.
