European Central Bank: One more hike then pause – Rabobank
Rabobank strategists Bas van Geffen and Elwin de Groot expect the European Central Bank (ECB) to raise the deposit facility rate by 25bp to 2.75% in December, driven by higher energy price forecasts.
The European Central Bank (ECB) is expected to raise the deposit facility rate by 25 basis points to 2.75% in December, according to Rabobank strategists Bas van Geffen and Elwin de Groot. This move is driven by higher energy price forecasts, as they believe energy inflation should ease from March, limiting further hikes. The ECB does not anticipate accelerating tightening, but remains cautious of upside risks if inflation broadens.
They expect the additional energy shock to hit inflation harder and earlier than economic activity, necessitating some further tightening to keep expectations anchored. As long as data and surveys do not indicate second-round effects, any deposit facility rate increases above the current 2.50% are considered temporary, with the ECB likely reverting them in the second half of 2027.
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