The European Central Bank will stop raising interest rates after the end of 2022 as the eurozone recession and deflating inflation lead to a reduction in monetary policy tightening, HSBC now estimates.
A decline in Russian natural gas flows and the resulting increases in energy costs will drive inflation higher than expected to peak at 10% in October, HSBC economists led by Simon Wells said in a report published today.
At the same time, the bank’s analysts stress that the squeeze on household incomes will make a recession “probably inevitable”.
“By the first quarter of next year, when the impact of the recession we now anticipate becomes more apparent and inflation begins to ease, we believe the tightening cycle will be over and we no longer expect rate hikes in 2023,” the report said. .
According to analysis by HSBC the ECB will raise interest rates by 50 basis points in September – with the risk of a further increase of 75 basis points.
This will be followed by increases of 25 basis points in October and December, the report estimates.
It is noted that in its previous assessment HSBC predicted increases until March 2023.
Source: Capital
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