The firm says though that "September is more likely than July" in this instance. Their previous forecast was for a back-to-back 25 bps move in July and September. In a note, the firm says that:
"A 50 bps hike is not inconsistent with the reaction function presented in Lagarde's policy normalisation blog.. We believe the ECB is continuing to underestimate inflation and we expect support for a 50 bps hike will increase as the summer progresses."
I would say the conviction for ECB policymakers to lean towards such a move will depend a lot on how inflation data develops in the coming months. But there is surely a lot of uproar among the hawks already after the inflation data this week.
