ECB deposit rate to peak at 3.75% or higher as inflation stays sticky – Reuters poll

“The peak for European Central Bank interest rates will be much higher than thought only a month ago,” per the latest survey of 60 economists polled by Reuters during March 7-9. The respondents also added that stubbornly high inflation would push policymakers to be more aggressive.

Key findings

All 60 economists polled by Reuters March 7-9 believed her and said the bank's deposit rate would rise 50 basis points to 3.00% on Thursday.

Medians in the poll showed the euro zone's central bank adding 25 basis points at the following three meetings in May, June and July to give a terminal deposit rate of 3.75%, higher than the 3.25% peak expected in a February poll.

While the median showed the deposit rate peaking at 3.75% it was a view held by only 19 of 60 economists surveyed. Twelve said it would be higher but 29 said it would be lower. The highest forecast was for 4.25%.

However, over 90% of respondents to an extra question, or 35 of 38, said the risks were the terminal rate would be higher than they expect.

There is now only a 34% chance of a recession within the coming year, the poll found, down from 50% in a January poll.

Also read:EUR/USD bulls poke 1.0600 as mixed US data test Fed hawks, US NFP, ECB’s Lagarde eyed