LBBW senior fixed-income analyst said the ECB likely still has room to raise
rates but is expected to stand pat at this week's meeting. The rate decision and
Lagarde's press conference are unlikely to materially change market pricing and
may instead temper medium-term rate expectations, given the Governing Council's
recent signaling of cautious tightening. Worsening unrest in France could
justify a more cautious stance. LBBW forecasts two further ECB hikes by spring
2027, with the policy rate peaking at 3%.
