At its meeting on September 8, the European Central Bank (ECB) decided to raise its three main interest rates by 75 basis points (the deposit rate is now 0.75%). Commerzbank economists continue to expect raise the deposit rate to 3% in March next year.
The ECB will stop the process of raising rates in the spring
“We expect the ECB to raise its deposit rate to 3% for the first quarter of next year. The signs from the ECB that it wants to reach the neutral interest rate by the end of the year (which it now probably sees at 2%) and that it is willing to go further speak in favor of notable rate hikes in the near future. This provision is likely to increase in the coming months, as the central bank could notably raise its inflation forecast.”
“Starting next spring, the ECB is likely to suspend the process of raising interest rates for about a year.since, on the one hand, the expected recession by many should then be clearly visible in the GDP data and, on the other, the 3% deposit rate should be noticeably above the neutral level from the ECB’s point of view .”
Source: Fx Street
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