ECB-inspired rally risks going too far

The European Central Bank raised its key policy interest rates by half a percentage point, with the deposit rate rising to 2.5%. It also announced its intention of delivering another 50 basis point rate hike in March. We expect the deposit rate to peak at 3.5%.  Green tilt: The ECB plans to tilt its corporate bond reinvestments more strongly towards issuers with better climate performance. This is symbolically important but its corporate bond holding is relatively small.