ECB to raise rates further, and perhaps faster

We revised up our forecasts for the ECB’s key policy rate this week, and now see it peaking at 3% next year rather than 2%. Moreover, we think there is a growing chance of a 100bp rate hike next month. Meanwhile, we think data released next week will show that euro-zone inflation hit a new record high of 9.5% in September and expect the business surveys to provide more evidence that the economy is entering a recession.