Algebris Investments' portfolio manager, Gabriel Foà, has said that despite the European Central Bank (ECB) hawks' tone softening, there remains a consensus that potential inflation dynamics are still too high. In a note, Foà said the ECB may raise rates by 25 basis points on Thursday, bringing the deposit rate to 3.5%, in line with market expectations and the committee's previous guidance. Foà said the focus will be on new inflation and growth expectations, which may be lowered given recent negative data surprises. Foà expects the ECB to provide guidance toward further hikes, with the terminal rate predicted to be 3.75%.