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BLOOMBERGÂ
The European Central Bank (ECB) is set to deliver three quarter-point increases in interest rates in May, June and July before ending the most aggressive bout of monetary tightening in its history, economists polled by Bloomberg say.
That would take the deposit rate to 3.75%, where it would stay through the rest of the year, according to the April 5-13 survey.
The results show economist expectations are broadly in line with those of investors, who’ve pared back bets on the peak of this cycle of hikes following the banking collapses in the US and Switzerland.
Speaking on the sidelines of the International Monetary Fund’s Spring Meetings, ECB officials were almost unanimous in calling for borrowing costs to be raised further on May 4, though the size of that move remains up for debate.
In remarks, Latvian central bank Governor Martins Kazaks said the decision is likely to be between slowing the pace to a quarter-point or opting for a fourth straight move of twice that size.
“At some point, it’s only natural that the step size is reduced — for example, the increase could be not 50 basis points, but 25 basis points,†he said, according to the Baltic country’s Leta news service.
The financial-sector turmoil may help the ECB by tightening credit conditions, President Christine Lagarde said.