A note from Deutsche Bank economists (via Reuters) on their expectations for European Central Bank monetary policy tightening.
- Expect there will be two interest rate hikes from the ECB in Q3
- One of them will be 50bps
- Say the 50bp hike is more likely in September than July.
- “A 50bp hike is not inconsistent with the reaction function presented in President Lagarde’s policy normalisation blog… We believe the ECB is continuing to underestimate inflation and we expect support for a 50bp hike will increase as the summer progresses”
Deutsche Bank’s previous baseline forecast was for a 25bp rate hike in July followed by another in September.
The next three monetary policy meetings of the ECB: