The Governing Council is likely to leave its policy guidance unchanged at next week’s monetary policy meeting, saying it expects to end net asset purchases in Q3 and raise policy rates “some time” after that. However, Christine Lagarde – or her deputy if Covid keeps her from the press conference – will have to concede that inflation is much higher than expected. And in our view, policymakers are likely to bring forward their plans to raise interest rates again before long, as inflation continues to surprise on the upside.
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