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Deposit rate to peak at 4%, no rate cuts until H2 2024

We expect the ECB to raise interest rates by 50bp next week and accompany that with new, hawkish guidance. Policymakers will probably be unable to agree numerical guidance, but we suspect that they will state their intention to raise interest rates further, and to leave them at the peak for a long time. We now think that the deposit rate will reach 4% in June and stay there until the second half of next year. And as long as market conditions remain favourable, the Bank will probably accelerate QT in July.

Euro-zone Drop-In (14th Mar.): How will recent data shape the ECB’s messaging at its March meeting? How high is it likely to push the policy rate to tame inflation? Register now for this 20-minute online preview of the meeting at 10:00 GMT/11:00 CET on Tuesday, 14th March. Register here.

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