ECB Keeps Raising Rates While Adopting a More Dovish Tone

Tuesday 01 November 2022

Amundi Convictions

November 2022 | 2 minute read    


On 27 October 2022, the Governing Council of the European Central Bank (ECB) raised its policy rates by 75 basis points, bringing the deposit facility rate to 1.5%, the refinancing operation rate to 2.0% and the marginal lending facility to 2.25%1. We believe, this increase was in line with markets’ expectations. The most relevant aspect of this meeting has been the more dovish tone of the ECB, due to the worsening economic outlook.

During the press conference2 that followed the monetary policy meetings, ECB’s President, Christine Lagarde, reaffirmed again the commitment of the institution in continuing the fight against persistently high inflation, noting that it will “stay above our target for an extended period”. Madame Lagarde highlighted that the Governing Council had “no hesitation” in taking the appropriate measures to combat inflation.

In our view, it appears the ECB could be more worried about the evolution of economic growth. Geopolitical issues and increased prices of food are among the main negative factors and risks to the economic outlook are on the downside.

Against this backdrop, the Governing Council adopted a more dovish tone and changed some key words in its statement: reference to further rate hikes “over the next several meetings” was replaced, and the Governing Council now “expects to raise interest rates further.” President Lagarde acknowledged the “substantial progress in withdrawing monetary policy accommodation”, hinting that the normalization process has reached a good point.

Regarding the future, the ECB will maintain their “meeting-by-meeting” approach, this time including economic growth in their considerations.

Additionally, the ECB decided to recalibrate the third series of its targeted longer-term refinancing operations (TLTRO III)3 as a way to ensure consistency with the monetary policy normalisation process.

Looking ahead, it seems that the crucial aspects around the reduction of the asset purchase program portfolio will be decided in the next meeting in December, as no discussion took place at this meeting. President Lagarde also reiterated the need for targeted and temporary fiscal support measures, that in turn should not contribute to increase inflation even more.



1. Source: European Central Bank, Monetary policy decisions, 27 October 2022
2. Source: European Central Bank, Monetary policy statement and Press conference, 27 October 2022
3. Source: ECB recalibrates targeted lending operations to help restore price stability over the medium term, 27 October 2022


Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of 28 October 2022. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.

Date of first use: 1 November 2022

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