ECB to raise rates by 25 basis points in July, slim majority say Sept too: Reuters poll
By Prerana Bhat
BENGALURU (Reuters) — The European Central Bank will raise interest rates by 25 basis points on July 27, according to all economists in a Reuters poll, a slight majority of whom were now also expecting another hike in September.
Inflation in the euro zone has almost halved, down to 5.5% in June from a peak of 10.6% last October, but that has not been enough to deter the ECB, which said inflation was «projected to remain too high for too long» and it had «more ground to cover».
After eight consecutive rate rises since July 2022 for a total of 400 basis points, investors and analysts are now hotly debating how many more hikes are needed and how long rates will have to stay high to bring inflation to the 2% target.
ECB policymakers have all but promised one in July, leading all 75 respondents polled in the July 14-19 Reuters survey to conclude it will.
Economists were less unanimous about further tightening. While 35 of 75 predicted no more hikes, 40 economists now see another 25 basis point rise in September — a significant increase from only four in a June poll and similar to market expectations.
If realised, that would take the deposit rate to its highest since it was first launched as a policy tool in 1999.
«July is pretty much a given, they've communicated they will hike and it's not going to be a surprise to anyone. The question is whether they will have to hike in September or not,» said Bas van Geffen, senior macro strategist at Rabobank.
«For the next meeting, communication is going to be the most difficult part...a hold or a hike, they will probably keep it open. It is going to be a close call either way.»
Broadly hawkish commentary from the central bank has solidified views rate cuts would not be
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