Deutsche Bank Predicts ECB Rate Hikes in September and December

Huoxing Finance reports that on September 7, Deutsche Bank currently expects the European Central Bank to further raise rates by 25 basis points in December, building on its September hike, due to persistent energy risks pressuring inflation prospects. The bank’s research division previously forecast that the deposit facility rate would peak at 2.5% (currently at 2.25%), but now considers these assumptions under pressure. Although ongoing tensions in Iran pose upward risks to inflation, labor market conditions in the eurozone remain relatively weak, with little evidence so far that broader price pressures are driving wage growth. While Deutsche Bank currently views 2.75% as the more likely terminal rate, it notes that a faster easing of geopolitical tensions and weaker growth could keep the rate ceiling at 2.5%, and without broader inflationary pressures, a rate above 3% lacks justification. The ECB is scheduled to announce its interest rate decision on September 10, with markets widely expecting a rate hike.