In the latest note, economists at Deutsche Bank lifted their expectations for the European Central Bank (ECB) rate hikes, predicting one of the two interest rate hikes in the third quarter to be a 50 basis points hike in September.
Key quotes
"A 50bp hike is not inconsistent with the reaction function presented in President Lagarde’s policy normalization blog.”
“We believe the ECB is continuing to underestimate inflation and we expect support for a 50bp hike will increase as the summer progresses.”
The German bank had previously expected back-to-back 25 bps ECB hikes from July.