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Frederik Ducrozet highlights that the burden of proof is likely to reverse for the European Central Bank regarding additional interest rate hikes.
He notes that, as Pierre Wunsch recently stated, the ECB will need much stronger evidence of second-round economic effects to justify any further tightening.
The ECB delivered its first rate hike since September 2023, with higher inflation forecasts and a lower GDP outlook for 2026, according to Frederik Ducrozet. He also noted that a sharp rise in services inflation could keep the central bank alert ahead of any rate decisions in a separate update. These developments have shaped the current debate over further tightening measures.