According to survey participants, after the end of asset purchases in March, the ECB's first post-pandemic interest rate hike will be in September 2023. This means that the ECB will be almost 2 years behind the Bank of England in interest rate hikes. The UK has already started interest rate hikes to combat the rise in inflation.
Economists surveyed expect a 10 basis point increase in deposit rates, which is currently minus 0.5 percent, in September 2023.
The participants predicted that inflation, which is hovering at 5 percent, will approach the bank's 2 percent target next year, which will reduce the pressure on bank officials about interest rates.
“The ECB will try to strike a balance that it is ready to act against inflationary pressures and not tighten too soon,” DekaBank Economist Kristian Toedtmann said.
The Bank of England is expected to raise interest rates for the second time next week. The US Federal Reserve also signaled an interest rate hike in March at this week's meeting. ECB President Christine Lagarde, on the other hand, stated that there are differences between the three economies in her latest statement on interest rate hike expectations.
Deutsche Bank expects the rate hike to begin in December.
Economic growth in the Euro Zone slowed sharply at the end of last year, and the IMF revised its 2022 forecasts downwards. While supply chain woes that undermined the recovery have eased, new risks such as the Ukraine-Russia tension are threatening the economy and making the inflation outlook more uncertain.
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