The ECB Hikes Rates Amid Financial Market Volatility

The European Central Bank (ECB) raised its deposit facility rate by another 50 basis points (bps) to 3% at the March meeting, bringing its policy rate further into restrictive territory. Nonetheless, we would characterize the outcome as dovish because instead of giving strong guidance on its intentions for the next monetary policy meeting in May, the ECB opted for a cleaner meeting-by-meeting approach, with an emphasis on data dependence.