The European Central Bank (ECB) raised its key policy rates by 75 bps at its September meeting. In their revised base case, economists at ABN Amro see another 75 bps hike in October, followed by a 50 bps step in December.
Risks to the new forecast are balanced
“We now expect the ECB to raise its deposit rate to 2% most likely by end-2022. In our revised base case, we see another 75 bps hike in October, followed by a 50 bps step in December. The policy rate then settles at 2% through 2023.”
“The most likely alternative to this base, is three steps of 50 bps, with the terminal rate being reached in February 2023.”
“We had previously signalled a peak rate of 1.5%. We saw the risks to our previous peak rate call as being skewed to the upside, but we see the risks to our new forecast as being balanced.”