There is a case for the ECB to raise interest rates by another 75bp next week, but we suspect that it will instead slow the pace to 50bp as policy is getting closer to “neutral”. This would mean hiking the deposit rate from 1.5% to 2.0%. Further ahead, we forecast another 100bp of rate hikes next year which would bring the deposit rate to a peak of 3.0%. The Governing Council is also likely to say it will start shrinking its balance sheet in the first half of next year but at a very slow pace.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services