European Central Bank: Clients see higher peak and later cuts – Deutsche Bank
Deutsche Bank’s Mark Wall and Michael Kirker report that survey respondents expect the European Central Bank (ECB) to continue hiking, with a strong bias toward another move in September and a terminal rate between 2.50% and 3.00%.
Deutsche Bank's recent survey reveals that European clients anticipate the European Central Bank (ECB) to continue raising interest rates. The survey indicates a strong likelihood of another hike in September, with a projected terminal rate ranging between 2.50% and 3.00%. However, there is significant uncertainty regarding the timing of the next rate cutting cycle, with expectations spanning from Q2 2027 to 2028 or beyond.
Concerns about the ECB potentially over tightening have diminished since June, as the proportion of respondents fearing excessive hikes has dropped from 71% to 56%. The survey's projections vary, with 31% predicting the ECB will reach a 2.50% terminal rate, 37% foreseeing 2.75%, and 26% predicting 3.00%. Currently, market pricing suggests the ECB should raise rates to approximately 3% by mid-next year.
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