JPMorgan: The European Central Bank Hints That the Threshold for a Rate Hike Commitment Is Relatively High

Golden Ten Data reported on April 30 that Madison Faller, a strategist at JPMorgan Private Bank, stated in a report that the European Central Bank's policy statement on Thursday suggests that the threshold for committing to interest rate hikes is relatively high. Faller noted that the ECB’s reaction function is “maximum optionality.” She added that given the uncertainty, the market's expectation of nearly three rate hikes before the end of the year appears premature. “Core inflation in March did not reaccelerate, and long-term expectations remain quite stable,” she said. If there are no clearer spill-over effects from rising energy prices, the risk leans towards pricing in fewer rate hikes. JPMorgan expects only one rate hike this year, which may limit the EUR/USD rally to around 1.18–1.20.