European Central Bank: September hike path and oil risks – Nomura
Nomura’s Global Markets Research team, led by Andrzej Szczepaniak, George Buckley and Josie Anderson, expects the ECB to raise the depo rate by 25bp to 2.50% at the 10 September meeting and then pause.
Nomura analysts anticipate the European Central Bank (ECB) to increase the deposit rate by 25 basis points (bps) to 2.50% during their meeting on September 10th. They anticipate the ECB to refrain from raising rates in the following months. The analysts believe that price pressures stemming from the ongoing US-Iranian conflict and the economic strength of the euro area point to a September rate hike.
They also expect a robust September hike under all scenarios, including a more tempered one, similar to the June hike. After the September meeting, the analysts don't anticipate any additional rate hikes. However, there are risks of further hikes depending on the duration and intensity of the Iran conflict, and whether Brent crude oil remains around $95 per barrel or rises higher.
If the conflict persists until the end of September or October and oil prices stay between $80 and $100 per barrel, the ECB is expected to hike rates again in December. However, if Brent oil prices exceed $100 per barrel and stay at that level until late September or mid-October, the ECB might advance its December 2026 hike to October.
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