ECB expected to hike rates again in December as inflation nears double 2% target
TLT•A Reuters poll found that 64 of 73 economists expect the ECB to raise its 2.50% deposit rate by 25 basis points in December, while almost all expect it to hold rates this month. Economists forecast inflation averaging 3.0% this year and 2.6% next year.
1. December hike expected
All but three of 73 economists polled October 5-8 expected the ECB to hold its 2.50% deposit rate on October 29. A near-90% majority, 64 of 73, now expect a 25-basis-point increase in December, reversing last month’s survey, when more than 90% expected rates to remain on hold.
2. Inflation and growth outlook
Economists forecast inflation averaging 3.0% this year and 2.6% next year, up from last month’s forecasts of 2.9% and 2.3%. They expect euro zone growth of 1.0% this year, up from 0.8% in the previous survey, followed by 1.2% in 2027 and 1.3% in 2028.
3. Rate outlook remains uncertain
A majority of 40 of 70 economists expect the deposit rate to peak at 2.75%, while 24 expect it to reach 3.00%. ECB policymakers have argued against an October increase, with higher market rates cited as one reason to wait.
